Italian Prime Minister Silvio Berlusconi, embroiled in a sex scandal and facing three trials for corruption, had campaigned frenetically to turn the elections into a vote on him and his national policies.
But both Berlusconi's PDL party and its Northern League allies did badly in the first round of voting on Sunday and Monday in elections in 1,310 towns and 11 provinces. The polls were seen as a key test for the premier midway through his term.
Milan's centre-right mayor Letizia Moratti, Berlusconi's candidate, won 41.6 percent of the vote against 48 percent for her rival Giuliano Pisapia, giving the left a chance to win Italy's financial capital for the first time in nearly 20 years, in the run-off in two weeks.
"Milan turns its back on Berlusconi" and "Shock for Berlusconi in Milan" were among front page headlines in Italian papers on Tuesday.
Many analysts described the result in Milan after two decades of centre-right dominance as extraordinary, even though Moratti still has a chance to win the city in the run-off.
"The run-off in Milan doesn't humiliate the outgoing mayor as much as it humiliates Silvio Berlusconi ... who gets a slap in the face on a personal and political level," wrote Massimo Franco in Italian daily Corriere Della Sera.
Milan is Berlusconi's home town, where he built his business fortune and launched his political career.
The vote confirmed indications from opinion polls showing Berlusconi's popularity has been undermined by a sex scandal, three corruption and tax fraud trials and a faltering economy.
"He is saddened, surprised and saddened. He did not expect a result like this," the premier's aides told Italian news agency ANSA.
The anti-immigrant, pro-devolution Northern League fared worse than expected in its own heartland -- a factor likely to complicate already strained relations with Berlusconi.
Media reported that League leader Umberto Bossi had complained that his party had suffered because of Berlusconi's efforts to pass laws saving him from court cases.
The centre-left swept up Turin and won a first-round victory in its stronghold of Bologna, while Berlusconi's PDL party led in Naples, which is also set for a run-off in two weeks.
"The wind in the north is blowing against the PDL and the League," said Pierluigi Bersani, leader of the largest opposition party, although it paid for its notorious internal squabbles in the Naples vote.
Four concurrent trials, including one on charges that Berlusconi paid for sex with an underage prostitute, have pushed his approval rating to about 30 percent, the lowest since he swept to power for the third time in 2008.
The premier, who denies all charges and says politically biased magistrates are hounding him, appeared in court on Monday at a hearing into bribery charges.
Berlusconi is also taking the heat for failing to revive Italy's chronically low growth. The economy expanded just 0.1 percent in the first three months of the year, well below rates in Germany, France and even crisis-hit Greece.
The League, which is vital for Berlusconi's survival after a split in the ruling PDL party last year, has marked its distance from the premier on several issues in recent weeks, notably opposing Italy's involvement in the NATO bombing of Libya.
The League had hoped to cash in on Berlusconi's weakness, but it failed to boost its share of the vote in the big cities. In Milan and Turin it won less than 10 percent support.