Virginia Republican George Allen tonight conceded defeat in his tight Senate race against James Webb, giving Democrats a majority in the US Congress for the first time in 12 years.
The announcement by Mr Allen ended two days of uncertainty after Tuesday's elections in which Democrats swept Republicans out of control in the House of Representatives and the Senate.
Mr Allen trailed Mr Webb by nearly 9,000 votes of the 2.4 million cast, according to state electoral figures.
The result capped an election that saw Defence Secretary Donald Rumsfeld resigning and had President Bush shouldering "a large part of the responsibility" for Republican losses.
"It was a thumping," conceded Mr Bush last night.
Mr Webb's victory means the Democrats will be assured of 51 votes when the Senate convenes in January.
That marks a gain of six Senate seats in national elections in which the war in Iraq and Mr Bush were major issues.
After 12 years in the minority, Democrats wrestled control of the House of Representatives away from Republicans, and Mr Webb's win gives Democrats the coveted majority in the 100-seat Senate.
Democrats now have 229 seats in the House, 11 more than the number necessary to hold the barest of majorities in the 435-member chamber.
"The days of the do-nothing Congress are over," declared Democratic Senator Harry Reid of Nevada, in line to become majority leader.
"In Iraq and here at home, Americans have made clear they are tired of the failures of the last six years."
Mr Bush, who spoke of spending his political capital after his successful re-election two years ago, acknowledged: "As the head of the Republican Party, I share a large part of the responsibility."
With power on Capitol Hill tilted yesterday, Mr Bush faced the reality that Congress would be in the opposition's hands for the final two years of his presidency. He announced that Mr Rumsfeld would step down as Democrats have demanded.
"This new Democratic majority has heard the voices of the American people," said Nancy Pelosi, the liberal California Democrat set to become the country's first leader of the House.
She added that Americans placed their trust in Democrats. "We will honour that trust. We will not disappoint," she said.
Without losing any seats of their own, Democrats captured 28 Republican-held seats and won in every region of the country.
Aside from gains in Congress, Democrats took 20 of 36 governors' races to give them a majority of top state jobs - 28 - for the first time in a dozen years. New York, Ohio, Massachusetts, Colorado, Maryland and Arkansas went into the Democratic column.
With the wins, Democrats will be in a better position to shape state policy agendas and will play a key role in drawing congressional districts.