Hours after the results came in, Bush announced that Defence Secretary Donald H. Rumsfeld, the hard-driving and super-confident Pentagon boss, was resigning.

After his party’s sweeping defeat in the midterm elections, Bush said he and Rumsfeld had had “a series of thoughtful conversations” and agreed that “the time is right for new leadership at the Pentagon.” Bush said he would nominate Robert Gates, former head of the Central Intelligence Agency, and now president of Texas A & M University, to replace Rumsfeld. Bush said both he and the departing Secretary recognized the “value of a fresh perspective.”

Only days ago, Bush had voiced confidence in Rumsfeld, as he had consistently done since the start of his presidency. But Tuesday’s elections produced a furious reaction from the American public over a military campaign that has cost the lives of nearly 3,000 members of the armed forces and that many people of all political stripes have described as poorly managed.

Whether the president asked Rumsfeld to go or whether Rumsfeld took the cue from the elections, was not immediately clear. But people who know the Secretary said he might step aside on his own if he concluded that he had become a liability.

Democrats have accused Rumsfeld of ignoring the advice of some generals that imposing a peace in Iraq would be harder and bloodier than just winning the war to topple Saddam Hussein.

Gates is a member of the bipartisan commission that has been studying the Iraq campaign with the possibility of charting a new direction.

That commission is headed by James A. Baker, Secretary of State and a top adviser to the first President Bush.

Rumsfeld’s resignation comes after the Democrats picked up 28 seats in the House but the fate of the Senate remained in doubt as races for Republican-held seats in Montana and Virginia remained too close to call. Democrats would need both seats to win control of the Senate as well.

In Montana, Senator Conrad Burns, a Republican, was trailing Jon Tester, a Democrat, by a narrow margin. The race in Virginia — between another Republican incumbent, Senator George Allen, and Jim Webb, his Democratic challenger — was so close that some officials said it would have to be resolved by a recount. That prospect could mean prolonged uncertainty over control of the Senate, since a recount can be requested only after the results are officially certified on November 27, according to the state board of elections.

But the Democrats’ victory in the House — overcoming a legendarily efficient White House political machine — represented a dramatic turnaround in the fortunes of the party and signalled a sea change in the political dynamics in Washington after a dozen years in which Republicans controlled Congress for all but a brief period.

No less significant for the long-term political fortunes of their party, Democrats were winning governors’ seats across the country — notably in Ohio, a state that has been at the centre of the past two presidential elections. By early this morning, Democrats had knocked off Republican incumbents from New Hampshire to Florida.

Karl Rove, the President’s top political strategist and considered the architect of his victory in 2004, alerted Bush that the House was lost at around 11 pm, the White House said. “His reaction was, he was disappointed in the results in the House,” Tony Fratto, a White House spokesman.

Democrats celebrated the results in a raucous rally at a victory party in Washington. “The American people have sent a resounding and unmistakable message of change and a new direction for America,” said Representative Rahm Emanuel, the Illinois Democrat who led his party’s campaign this fall in the House.

By any measure, the result was a sobering defeat for a White House and a political party that had just two years ago, with Bush’s re-election, claimed a mandate to shape both foreign and domestic policy and set out to establish long-term dominance for the Republican Party. To the end, Rove had expressed public confidence that the electoral tools he had used to great effect in his long association with Bush — a sophisticated get-out-the-vote effort, an aggressive effort to define Democratic candidates in unflattering ways, a calculated and intense campaign to fuel the enthusiasm of conservative voters — would save the Republicans from defeat.

In light of the defeat, Bush’s aides were striking a more conciliatory tone as they faced the prospect of two years of divided government and a clearly enlivened Democratic Party. “We always recognized this was going to be a very challenging year,” Ken Mehlman, the Republican Party chairman, said on CNN. “We have to continue to work and try to work on a bipartisan basis to accomplish things.”

The election to a large extent became a national referendum on Bush and the war in Iraq, according to exit polls. Sixty per cent of voters leaving the polls yesterday said they opposed the war in Iraq, and 40 per cent said their vote was a vote against Bush.

In addition, a significant number of voters said corruption was a crucial issue in their decision, in a year in which Republicans have struggled with scandal in their ranks.

Independent voters, a closely watched group in a polarized country, broke heavily for Democrats over Republicans, the exit polls showed. Democratic leader in the House and the first woman Speaker of the House Nancy Pelosi took note of the importance of the war in the outcome in her own victory speech early this morning. “Nowhere did the American people make it more clear that we need a new direction than in Iraq,” she said, speaking to cheers.

“We cannot continue down this catastrophic path. So we say to the president, ‘Mr. President, we need a new direction in Iraq. Let us work together to find a solution to the war in Iraq.’”

—ADAM NAGOURNEY & DAVID STOUT