LABOUR won the Inverclyde by-election early today but with a much reduced majority over the SNP

Relieved party chiefs claimed the Nationalist momentum from May's Holyrood election had been halted, though the majority of 14,416 they carried into the election was slashed to 5838.

The new MP Iain McKenzie polled 15,118 votes compared to SNP challenger Anne McLaughlin's 9280.

Despite disappointment at the defeat, the SNP highlighted the swing of almost 9% in their favour.

Tory David Wilson was third while the LibDem candidate Sophie Bridger lost her deposit as did UKIP's Mitch Sorbie.

Mr McKenzie, leader of Inverclyde Council, said the result was "tremendously significant" for Labour and had "stopped the SNP bandwagon in its tracks".

He said: "Labour's fightback has started right here in Inverclyde."

It was an "important step in Labour's mission to win back the trust of the people both here in Scotland and south of the Border".

Mr McKenzie added: "The people of Inverclyde have sent a clear message in this election. Not just to the SNP but to the Tory Government in Westminster. Mr Cameron, Mr Clegg, listen to the people. Stop the unfair cuts which are too deep and too fast and for which you have no mandate.

"You are hurting thousands of hard working people here with the most savage attacks on our communities since Thatcher."

He told The Herald: "To step up there and have the people of Inverclyde again show their confidence in Labour is absolutely tremendous.

"We were always the ones that said we would work for every single vote right to the last minute. We were never complacent. We never will take Inverclyde for granted and that is reflected in the positive campaign we conducted."

Shadow Scottish Secretary Ann McKechin added: "Just 56 days since losing the Holyrood election, Labour has shown we are able to win back the trust of the electorate in Scotland.

"This is a real setback to the SNP and a personal humiliation for Alex Salmond, who campaigned here no fewer than seven times and told his party members he would win before a single vote had been cast.

"I think voters were turned off by the SNP's arrogant and negative campaign and responded to Labour's positive vision for our future.

"This is a great night for Labour and a great night for Inverclyde."

West Dunbartonshire Labour MP Gemma Doyle admitted lessons had been learned from her party's miserable performance in the Holyrood poll and said the party could "build from this result".

She highlighted the seven visits made to the constituency by Mr Salmond during the campaign and claimed: "The SNP were very confident and I think voters may have punished them for that."

However, SNP MSP Kenneth Gibson said the swing to his party showed the area was "fertile ground" for the Nationalists and they would build on it in advance of next year's council elections.

The MSP for Cunninghame North added: "We have cut Labour's majority from 14,500 and we have got the best result we have ever had in a Westminster election in this constituency.

"The Liberals controlled the council until 2007 and yet they have ceased to exist as a major political force in Scotland tonight.

"Now it is a two horse race between the SNP and Labour.

"This is a serious blow to Labour. In just three weeks the SNP has slashed Labour's lead in their heartlands by over half.

"There will be real questions for Labour's leadership after letting such a safe seat come so close to defeat. The SNP's momentum continues as Labour's woes deepen."

Ms McLaughlin added: "More people voted for the SNP in this election than in any previous Westminster election in this seat. That is a step forward for my party. And it is a signal that more and more Scots now know we cannot have business as usual."

Labour was nervous going into the election after veteran Greenock and Inverclyde MSP Duncan McNeil clung on to his Holyrood seat by just over 500 votes.

Party officials claimed their internal polling at the start of the campaign showed them to be neck-and neck with the Nationalists and their relief at the size of the majority was obvious after last-minute jitters they might only just scraped a victory.

However, the result allows Mr Salmond to claim the momentum of May's Scottish Parliament victory is still behind the Nationalists.

He will say the result strengthens his case for increasing the scope of the Scotland Bill and that there is a groundswell in favour of the additional powers he wants.

It will also be a confidence-builder for his planned independence referendum.

The cut in the size of Labour's majority means the review of its disastrous Holyrood performance being conducted by MP Jim Murphy and MSP Sarah Boyack will now have to broaden into a wider look at how the party is regarded by once loyal voters.

Local authority elections are now less than a year away and if the SNP continues to make inroads into Labour's core vote, they could take control of councils currently held by Labour dealing the party another serious body-blow.

Both the Tories and the LibDems saw their share of the vote fall but it was a particularly dismal night for LibDems polling only 627 votes and dropping by more than 11%.

The by-election was caused by the death of former Scotland Office minister David Cairns.