6.15pm update

Rumsfeld axed after Democrat victories

· Defence secretary steps down
· Democrats take control of House
· Senate in balance
Nancy Pelosi and fellow Democrats celebrate taking control of the House of Representatives at an election night party in Washington
Nancy Pelosi and fellow Democrats celebrate taking control of the House of Representatives at an election night party in Washington. Photograph: Matthew Cavanaugh/EPA
President George Bush's job was today a lot tougher after the Democrats won control of the House of Representatives, breaking the conservative monopoly of power in Washington and clearing the way for congressional investigations into the conduct of the Iraq war.

One of the first consequences was the departure of the defence secretary, Donald Rumsfeld.

The newly-empowered Democrats had wasted little time in renewing calls for the president to sack him, and in a press conference at lunchtime (1800GMT), Mr Bush announced that the new defence secretary would be Robert Gates, a former head of the CIA.

Mr Bush said he and the Democrats "must work through differences" to find common ground on the issues facing the US.

The future of the Senate still hangs in the balance, with the state of Virginia yet to be decided and lawyers preparing to fight over the outcome.

The result in Montana - one of the most closely-run contests - was declared late for the Democrats by a narrow margin.

In Virginia, the Democratic challenger, Jim Webb, holds a lead of fewer than 12,000 votes out of 2.3m votes cast. If the final tally is close enough, with a margin of less than 0.5%, the loser can call for a recount.

A Republican victory in Virginia would give the US vice president, Dick Cheney, the casting vote in a 50-50 split Senate.

In the early hours of the morning, the Republican incumbent, Senator George Allen, said counting would continue throughout the night, urging his supporters to watch the tally "like eagles and hawks".

Even before the sun rose over Virginia, both parties were firing off emails to sympathetic lawyers, calling on them to prepare to do battle over every legal grey area.

Ed Gillespie, a Republican campaign advisor, this afternoon told reporters there had been some problems with the count, including one precinct in which some votes for Mr Allen had initially not been counted correctly.

Complicating the picture still further, the FBI opened an investigation into alleged fraud and intimidation involving phone calls made to Democratic voters in Virginia falsely claiming their names were not on the electoral rolls or giving false information about the location of polling stations.

Elsewhere, the Democrats made Senate gains in Missouri, Ohio, Rhode Island and Pennsylvania.

Joe Lieberman, standing as an independent, won the Connecticut race. He beat the Democratic candidate, Ned Lamont, but has pledged to vote with the Democrats in the new chamber.

The Democrats were also celebrating holding the most state governorships since 1994.

Bush reaches out for bipartisan compromise

This morning, Mr Bush made the call he must have feared the most - to congratulate the new speaker of the House of Representatives, Nancy Pelosi, who Republicans turned into a hate figure in the last days of the campaign.

Despite this, the White House press secretary, Dana Perino, said the president and Ms Pelosi had had "a very good conversation" in which they "pledged to work together".

The president has invited her to lunch at the White House tomorrow, and also spoke with other Democratic leaders today.

"In all of those calls, I would say there was a strong spirit of goodwill ... the president said: 'Congresses change, but issues don't'," Mr Perino said.

Ms Pelosi, a tough, resoundingly liberal Democratic leader from San Francisco, will become the first woman ever to serve as the speaker of the House of Representatives, where the party gained 27 seats and were leading on two more.

Among other milestones last night, Bernie Sanders, of Vermont, became the first socialist in the US Senate, and Deval Patrick was elected governor of Massachusetts, only the second black governor in US history.

Keith Ellison, in Minnesota, became the first Muslim elected to the House of Representatives.

As the speaker, Ms Pelosi will be in a powerful position. She will appoint the chairs of the all-important House committees - which can launch enquiries and ask difficult questions about the Iraq war and other issues - and she will control the legislative agenda in the chamber.

She and her party will also have a powerful say over taxes and spending.

Call for new direction in Iraq

In theory, the job gives her less sway over foreign policy but, in her victory speech last night, she made it clear she would not be bound by such traditional constraints.

She said the electorate had made it clear that they wanted a "new direction in Iraq".

Cooperation between the White House and a Democratic majority in the House would require a sea change in political style on the president's part.

On the basis of the most questionable of mandates in 2000, he governed as though he had won a landslide.

Gay marriage was one of the big losers in the election, with a string of ballot initiatives calling for a ban being passed.

In South Dakota, however, a proposal to ban abortion under almost all circumstances was defeated.

Overall, the election continued a long political realignment in the US, leaving the demarcation line between a Republican south and a Democratic north-east and west even more pronounced.

The biggest Republican losses last night were "behind enemy lines" in the liberal east, holdovers from a more bipartisan age.

By that measure, the sharp geographical divide in US politics just got deeper.

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