The SDP Liberal Alliance, fighting its first national contest, won just 23 seats under the "first-past-the-post" electoral system, despite receiving nearly as many votes as Labour.

Mrs Thatcher announced the forthcoming parliament would have a "heavy programme", featuring some of the bills which fell before the election.

She also pledged to re-organise local authorities and to introduce bills on trade unions and rates.

Parliament is to meet for the first time next week, when the speaker of the House will be sworn in.

The prime minister said her first priority for the new term would be to reshuffle her cabinet. She insisted it would reflect a range of political views, saying, "I haven't been extreme for the last four years and I'm not extreme now."

Defeated Labour Party leader Michael Foot described the result as a tragedy for the country.

He said: "I agree with those who said the fight to win the next election starts immediately and of course I accept, to the full, my responsibilities in this election."

Mr Foot strongly attacked the SDP for siphoning support away from Labour - giving more seats to the Conservatives.

The SDP Liberal Alliance blamed Britain's "winner takes all" electoral system on its failure to convert its significant electoral support into seats in parliament.

David Steel said: "I feel a real sense of outrage at the vast number of votes we picked up with so little to show for it in the way of seats."

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