German Chancellor Angela Merkel has called a narrow defeat in a state poll "painful", saying that her party has to work to rustle up support before the September general election.
Merkel's ruling centre-right camp lost its decade-long hold on the northeastern state of Lower Saxony on Sunday by just one seat to the opposition Social Democrats and Greens Sunday in one of the tightest races in recent memory.
"Of course when you have been on such an emotional roller-coaster then a defeat is that much more painful," she said on Monday after huddling with her Christian Democratic Union (CDU).
"We have got to ensure that we in future election campaigns get the necessary majorities together."
Lower Saxony, a vast agricultural and industrial region of eight million people, resembles a US-style swing state.
The upset left her junior coalition partners, the pro-business Free Democrats (FDP), reeling after months of dismal poll numbers and criticising their leader, Philipp Roesler, the economy minister.
Roesler, who is also Merkel's vice-chancellor, offered to step down after nearly two years at the helm of the FDP in favour of his main rival, Rainer Bruederle, parliamentary group leader. But the latter declined.
However, Roesler will not carry the FDP's banner into the national election in eight months' time, leaving the job of chief candidate to Bruederle.
The move was seen as Roesler outmanoeuvring his challenger with a provocative ultimatum, buying him time at least until a party congress in March when the FDP will vote on its leadership and probably saving his job.
After a tight race with broad implications for the general election, the centre-left said it aimed to use its victory to create fresh momentum for its bid to deprive Merkel of a third four-year term.
"It shows the race until September is far from over," Peter Steinbrueck, the Social Democrats' challenger to Merkel, said.
The Social Democrats and Greens also won a majority in the Bundesrat upper house of parliament which represents the states, allowing them to stop legislation from Merkel's government and launch their own draft bills.
Merkel, who campaigned hard for David McAllister, Lower Saxony premier, a half-Scot seen as a potential successor as chancellor, enjoys a strong lead in national polls due to her fierce defence of German interests in the eurozone crisis.
The FDP managed to capture nearly 10 per cent in the Lower Saxony election - more than doubling many pollsters' forecasts and garnering their best result in Lower Saxony in post-war history.
But their success came at their allies' expense. The CDU scored just 36 per cent, with voters splitting their ballots under Germany's two-vote system in a bid to rescue the state coalition by helping the weak FDP.
Around 101,000 voters who backed the conservatives in 2008 plumped for the FDP this time, exit polls showed.
Pundits said the Lower Saxony win could help turn around the fledgeling campaign of Steinbrueck.
Merkel, for her part, said her CDU would now go it alone.
"It will be a general election campaign in which everyone fights for himself and his own votes," she said.
She was full of praise for the defeated McAllister, prompting speculation she might whisk him to Berlin for a senior party post and groom him for higher office.
Pundits spoke of a future "McMerkel" team.