The Taoiseach conceded last night that the O'Flaherty controversy and sleaze allegations were major causes of the collapse of the Fianna Fail vote in Tipperary South, where Fine Gael's strong performance has secured Mr John Bruton's party leadership for the foreseeable future.
The remarkable victory of an Independent, Mr Seamus Healy, also represents a serious setback for the Labour Party, which will now face difficulty in regaining a seat in the constituency.
After the Fianna Fail vote collapsed by 15 points in what is believed to be the worst by-election performance by the party in the history of the State, the Taoiseach said it was "obvious that recent events had a significant impact on the result". He and his party would endeavour to "try harder and listen better".
The Minister for Public Enterprise, Ms Mary O'Rourke, echoed his comments last night, saying the result was a "grave disappointment" from which the party would have to learn. The drop in the party's vote was "huge".
Mr Ahern's and Ms O'Rourke's frank comments came as shock waves went through the party at its poor performance following of recent controversies. The party's director of elections in the constituency, Mr Noel Davern, reflected the view of grassroots members, saying the various controversies had played a role over the last 10 days.
Acknowledging disappointment at the Labour Party's performance, Mr Ruairi Quinn tried to focus attention on the dismal Fianna Fail showing. The vote represented "a crushing vote of no confidence in the Fianna Fail-PD administration" because of its handling of the O'Flaherty and other controversies. It was "a public humiliation for the Taoiseach, for the Fianna Fail organisation and for the Fianna Fail-PD Government."
Meanwhile the Fine Gael leader, Mr John Bruton, will reshuffle his front bench next week, with his position as leader, which had been in serious question as a result of recent opinion polls, apparently secure after yesterday's party performance. He said his party had performed "brilliantly" in what was "a real opinion poll in real time on real ballot papers".
Up to five junior Fine Gael spokepersons including Ms Deirdre Clune, Mr Billy Timmins and Mr Charles Flanagan, director of elections in Tipperary South, are expected to be promoted to more senior positions.
The party whip, Mr Sean Barrett, is expected to leave the front bench as he is due to retire at the next election. It is not clear whether any other frontbench members will be dropped, but a number of senior spokespersons will be moved to new posts.
Mr Healy's impressive victory was secured through transfers from lower-placed candidates after he topped the poll on the first count with almost 31 per cent of the vote. Fine Gael's Senator Tom Hayes came in second with 26.7 per cent, seen as an impressive showing after recent poor opinion poll showings by the party.
Fianna Fail, widely expected to top the poll, came only third with 22.76 per cent, a spectacular drop of almost 15 points from the 1997 result. Labour's Mrs Ellen Ferris, seen by many as the favourite to take the seat held by her late husband came in fourth with 16.79 per cent, a slight increase on her late husband's 1997 performance.
Mr Healy, an Independent, is politically of the left, and his support group, the Workers and Unemployed Action Group, holds seven council seats in the county. He polled particularly strongly in working-class parts of Clonmel.
Mr Joe Higgins TD of the Socialist Party maintained last night that Mr Healy's victory was "the music of the future as far as the development of the left is concerned". It marked "a huge shift against the establishment parties in the direction of the left" as a result of "the revulsion of ordinary people against the ongoing saga of corruption in Irish political and business life".
The Government can now muster a three-vote Dail majority, but only with the support of the four Independents who traditionally back it and Mr Liam Lawlor and Mr Denis Foley, the two deputies who left the Fianna Fail parliamentary party amid financial controversies.