John Mason won by 365 votes over Labour's Margaret Curran after recording a 22 per cent swing to the SNP. The declaration had been held up after Labour demanded a recount at 1:30am, with only 355 votes separating the two main parties.

Mr Mason, who had arrived at the count to a hero's welcome from party activists, told The Scotsman: "This is going to have a huge impact. Somebody said it's No 10 on the Richter scale. It just feels tremendous. It was a huge challenge, a huge majority to overcome.

"It is going to send a message all around the country."

Alex Salmond, the SNP First Minister, was not present at last night's count, in contrast to his high-profile presence on the campaign trial.

The Prime Minister now faces a summer of discontent after the degree of Labour unpopularity was laid bare in what was previously the party's third-safest Scottish seat.

If the result were to be repeated at the next general election, Labour would be ousted from government and more than 150 of the party's 350 MPs would lose their seats.

Mr Brown, already suffering the lowest personal ratings of any prime minister since polling began during the Second World War, now faces the prospect of months of back-bench plotting before the Labour conference in September.

With dozens of MPs fearful of being ousted at the next general election – due by June 2010 – speculation will increase about the need for Mr Brown to stand down. Alternatively, he could face a challenge from a Labour heavyweight.

However, internal Labour Party rules make it difficult to mount a challenge against a sitting prime minister, as any rival would have to secure the signatures of a fifth of the parliamentary Labour Party – at least 70 colleagues.

Today's result, declared shortly before 2am, is the SNP's first gain from Labour since Jim Sillars won Govan in 1988.

Mr Mason, the SNP group leader on Glasgow City Council, polled 11,277 votes – a 43 per cent share – to 10,912 for Ms Curran, the Labour MSP for Baillieston.

Tory, Davena Rankin, came third with 1,639 votes, while Liberal Democrat Ian Robertson polled 915, losing his deposit.

There was a 42 per cent turnout – compared with 48 per cent of electors who voted in the 2005 general election.

The health minister, Nicola Sturgeon, described the swing towards her party as "epic", saying it had been a "tremendously good" night.

Ian Robertson, Liberal Democrat candidate, said: "At the moment I feel quite disheartened. I guess it will be back to the classroom tomorrow. Our vote was always going to be soft here and we've lost out to the squeeze from the SNP."

David Mundell, Conservative shadow secretary of state for Scotland, said "We have to look at this vote in a UK context, not just a Scottish one.

"It's devastating for Gordon Brown and Labour and shows that they are now seriously on the slide."

Mr Salmond will view the result as a ringing endorsement of the SNP's first year in government at Holyrood. Earlier this week, he raised the stakes by describing the by-election as a "tale of two governments" and effectively a referendum on his own popularity and that of Mr Brown.

The campaign had seen Ms Curran portray Mr Mason as a "hardline" Nationalist interested more in independence than improving the lot of one of the UK's most deprived communities.

But Mr Mason and Mr Salmond said an SNP victory was the only way to "send a message" to the Prime Minister about concerns over the rising cost of living.

Labour failed to retain the seat despite former MP David Marshall having won by 13,507 votes in 2005 with 60 per cent of the vote. Then, the SNP took only 5,268 votes and 17 per cent of the poll.

This morning's result was the third seat Labour has lost in the current parliament, following by-election defeats to the Lib Dems in Dunfermline and West Fife in 2006 and the humiliation of losing Crewe and Nantwich to the Tories in May, when a 7,078 Labour majority was converted into a 7,860 winning margin for the Tories in a supposedly safe area.

Mr Brown was further damaged last month when Labour fell to fifth place in the Tory safe seat of Henley, behind the British National Party.

Today's result also marks one of the biggest swings in political support of modern times, sitting alongside the 29 per cent swing to the Liberal Democrats in Brent East in 2003.

However, the result was not the biggest majority Labour has seen overturned in recent times – it lost Leicester South to the Liberal Democrats in 2004 despite defending a 15,715 majority.

But the significance for the future of the party – and the Prime Minister – is far greater with this result.

FULL RESULTS

John Mason (SNP) 11,277 (43.08%, +26.06%)

Margaret Curran (Lab) 10,912 (41.69%, –18.99%)

Davena Rankin (C) 1,639 (6.26%, –0.64%)

Ian Robertson (LD) 915 (3.50%, –8.35%)

Frances Curran (SSP) 555 (2.12%, –1.42%)

Tricia McLeish (Solidarity) 512 (1.96%)

Eileen Duke (Green) 232 (0.89%)

Chris Creighton (Ind) 67 (0.26%)

Hamish Howitt (Choice) 65 (0.25%)