The Conservative loss last night came in a contest in the Bridlington North ward of East Riding of Yorkshire Council.
The party's candidate Mike Heslop-Mullens won the contest with a comfortable 493-vote majority over his nearest Tory rival Martin Burnhill.
The by-election had been triggered by the sudden death of long-serving Conservative Councillor Richard Harrap, who had held a seat in the ward since 1999.
The Lib Dems captured 43 per cent of the vote, against 27 per cent for the Conservatives.
At the local election in May, the Lib Dems did not field any candidates in the ward and the Conservatives easily won all three seats against a single Labour candidate.
At this point the Conservatives increased their majority by two to increase their stranglehold over the authority, while the Liberal Democrats more than doubled their number to eight.
The Independents had been hoping to make massive strides in the all-out elections, but in the end managed eight seats, including in Goole South where David and Barbara Jeffreys beat the two sitting Labour councillors.
Voting in yesterday's by-election was: LD 1,308, C 815, Yorkshire Party 349, Ukip 196, Lab 135, Ind Dixon 125, Ind Robson 76, Ind Milns 58. The turnout was 26 per cent.