Paul Nuttall's party lost all its seats in Lincolnshire, Hampshire and Essex, all key battlegrounds for Ukip at next month's General Election.
With results available from 15 councils, Ukip had lost all 30 seats it held and failed to win a single contest.
Elections expert Michael Thrasher told Sky News Ukip's share of the national vote could fall as low as 3%, down from 22% in the same contests in 2013.
Ukip lost 10 seats in Lincolnshire, where party leader Mr Nuttall has decided to run in the General Election.
It lost a further eight seats in Hampshire and six seats in Essex.
Politics professor John Curtice said Ukip "has lost everything they've been trying to defend".
Ukip's Lisa Duffy insisted the results were not a "disaster" for the party but acknowledged it was "very disappointing" it had been wiped out in Lincolnshire.
"I won't use the word 'disaster', I'll use the word 'challenging'," she told the BBC.
"We knew it was going to be a difficult night."
Prof Thrasher told Sky News: "Ukip received one in eight votes cast at the 2015 general election, and therefore those votes are absolutely critical in a month's time at the General Election.
"The indications from the local elections are that Ukip is losing all of its councillors and it's the Conservatives that are making the gains on the basis of that collapse."
Ukip local government spokesman Peter Reeve said the party had always expected a "very tough" set of elections, defending seats won in its breakthrough year of 2013.
Theresa May had been successful in "cynically" promoting a "myth" that the Tories had replaced Ukip as the party of Brexit, he said.
But he told BBC One's Breakfast that the suggestion that Ukip was no longer needed "couldn't be further from the truth", adding: "Even if we don't win a single seat later on today, Ukip still has 300 councillors across the country and is still a very relevant, real voice in local politics.
"What is also true is we continue - and have done for many years - to control the national agenda and the Government agenda. They didn't want to have a referendum on Brexit, Ukip forced that on them, they were terrified of us and they did it."
Asked whether it was time to bring back Nigel Farage as leader, Mr Reeve said: "Paul Nuttall is our leader, we're very proud of him as our leader.
"He's had a very rough time - even Nigel says he has not experienced the media backlash and horror that poor old Paul has experienced. And yet he is still humorous and rides roughshod over it.
"I'm very proud of our leader. I think he has a very long-term role leading our party."
Lib Dem grandee Sir Vince Cable said Ukip's collapse had important implications for the General Election.
"Ukip has virtually disintegrated, and that matters politically because, if you are a middle-of-the-road Conservative who voted Remain and you see your own party effectively assimilating Ukip and its values as well as its voters, I think they will have pause now and worry about the future."
Born in York, the former business secretary told BBC One's Breakfast: "We've held our ground, unlike Labour, which has collapsed, and Ukip, which has virtually disappeared.
"In areas where we hope to win back MPs when we get back to the General Election, like Cheltenham and Eastleigh and Wells, we've done exceptionally well - our vote share has gone up."