Reform UK leader Richard Tice said his party was becoming Labour’s “real opposition” after winning a distant third place in the Blackpool South by-election.
The party, the successor to Nigel Farage’s Brexit Party, was just 117 votes behind the Conservatives.
Mr Tice told the BBC that the Conservative Party was “clearly headed for collapse”.
Conservative Party chairman Richard Holden said it was a “disappointing night” for the party.
“But that’s what you would expect from a party in the middle of its term in power,” he added.
Reform UK also lifted the Conservatives to third place in Sunderland City Council’s 16 seats.
Election expert Professor Sir John Curtis said the party’s showing in Sunderland was “quite substantial”.
However, he added that their vote share had fallen compared to the results achieved by the reform’s predecessor, UKIP, in 2015-2016.
Reform UK stood in a relatively small number of areas in these local elections, fielding 326 candidates out of 2,660 candidates.
With 35.5% of results announced, Reform UK is yet to win a parliamentary seat.
Mr Tice congratulated the party on its performance in the Blackpool South parliamentary by-election and said he was delighted to receive 17 per cent of the vote.
Mr Tice said: “As more people hear about reform, what is rapidly becoming clear is that we are becoming the real opposition to Labor in the north, the Midlands and Wales.”
“We’re on the way up, but it’s clear the Conservatives are on the way down.”
Asked about the chances of Reform UK winning seats in the next election, Tice said Britain had a “wrong electoral system”.
“It’s clearly unfair that we get 17% of the vote nationally but can’t win seats because of our system. This shows that our democracy is not working.” said Mr.
“That is why most Western countries have some form of proportional representation.
“Ironically, the Conservative Party is rapidly collapsing and will soon be calling for proportional representation to prevent its total destruction.”
Mr Tice was also asked whether the party’s former leader, Nigel Farage, would return to the front line of politics ahead of this year’s expected general election.
“The more help Nigel can get, the better. He has big decisions to make…and of course the clock is ticking,” he said.
Speaking on BBC Radio 4’s Today programme, Mr Anderson rejected the idea that the new party was supporting Labor, saying the Reform Party and the Conservatives combined would not be able to beat Labor in many areas.
“When the general election comes, this party will win seats. A vote for reform is a vote for reform,” he said.
