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The British National Party, which used images of the bombed London bus on a leaflet, has failed to gain a council seat at a by-election.
Labour held the Becontree seat in the east London borough of Barking and Dagenham with a majority of nearly 800.
The BNP used a photograph of the bus with the caption, "maybe it's time to start listening to the BNP" .
In another by-election in the borough last month the BNP lost its only council representation in London.
The winning candidate, Alok Agrawal, said after the result: "It was very sad using a national tragedy in order to try and gain votes."
"They thought people were fools. They thought people would fall into a trap.
"But the voters have massively rejected them. They have told the BNP 'We don't want you in Barking and Dagenham'."