The Prime Minister insisted he has the answers to voters’ concerns on Europe, immigration and the economy.
But senior Tory backbenchers said that the time had come for him to open talks with Mr Farage.
The results also left serious questions about Labour’s ability to win next year’s general election after it lost seats to Ukip and failed to pick up enough support to create a platform to put Ed Miliband into Downing Street. It won just 31 per cent of the vote, only 2 per cent ahead of the Tories.
Furious Labour MPs accused Mr Miliband of being elitist, “unprofessional” and leading a weak campaign. Labour failed to push out the Tories in key target areas.
Deputy Prime Minister Nick Clegg’s Lib Dems were also left reeling after they lost more than 40 per cent of their council seats and two councils.
The collapse in the Tory vote saw the Conservatives lose control of 11 councils, including the flagship London borough of Hammersmith to Labour, and South Essex after a Ukip surge. The Tories lost almost 200 seats, leading to speculation that next year’s general election could return another hung parliament.
With European Parliament results still to be declared tomorrow and Ukip set to perform strongly, Mr Cameron faced a barrage of calls from Tory backbenchers that he tries to form a pact with Ukip.
As the declarations came in, a trio of leading Conservative MPs – Douglas Carswell, Peter Bone and Jacob Rees-Mogg, all on the right of the party – called for a pact with Mr Farage. Mr Rees-Mogg said: “In a first-past-the-post system, if they don’t get those votes into one pot, then both those sides end up losing.”
Tory backbencher John Baron, MP for Basildon and Billericay, which had a strong Ukip showing, said the PM was still making mistakes and ceding ground to Ukip. “While accepting that Ukip is in part a protest vote, the political establishment has been too complacent over the EU. It must now heed the message from these elections,” he said.
“No10 must learn from past mistakes. First it tried to ignore, and then insult, Ukip. It then took our backbench campaigns to get a referendum, and then support for legislation.”
But Mr Cameron, who in the past has dismissed Ukip as “fruitcakes and loons”, spurned the calls for him to open talks. “We are the Conservative Party. We don’t do pacts and deals. We are fighting all out for an all-out win at the next election,” he said.
“People want us to deliver. The economy is growing, we are creating jobs, but we have got to work harder and we have got to really deliver on issues that are frustrating people and frustrating me, like welfare reform and immigration, and making sure people really benefit from this recovery.
“We will be working flat-out to demonstrate we do have the answers to help hard-working people.”
He added: “I’m confident that in spite of the difficulties, this is a base from which we can go forward and win.”
Celebrating gains of more than 150 council seats with a pint of beer, Mr Farage warned the “Ukip fox is now in the Westminster hen house”.
He rejected the idea of a pact with the Tories. Asked whether the party would widen its pitch to voters beyond an EU referendum and tighter immigration restrictions, Mr Farage insisted it already has “clear principles” on cutting taxes and bringing back grammar schools. He said: “Don’t think the immigration issue is going to go away. The plight of the eurozone is such that immigration is likely to be an even bigger question at the time of the general election than it was on Thursday.
“There are areas of the country where now we have got an imprint in local government. Under the first-past-the-post system we are serious players.”
He went on: “We will see you at Westminster next year. This party is going to break through into Westminster next year.”
He also outlined a strategy similar to Paddy Ashdown’s with the Lib Dems, to target resources on a few winnable seats in next year’s general election.
Mr Clegg urged activists to highlight the positives the Lib Dems had brought to the coalition, such as the pupil premium and raised income tax threshold. “Where we do that, in those places where we are strong, we’re still winning,” he said.
Labour leader Ed Miliband said: “What we heard last night was a deep sense of discontent with the way the country’s run and a deep desire for change.
“You also saw some people turning to Ukip – and I am determined that over the next year we persuade them that we can change their lives for the better.”