For the first time in a decade the US Republican Party wakes up this morning nursing the bitter taste of defeat after a dramatic night of Democratic triumph that redrew the map of American politics.

The unpopularity of President Bush, anger at the faltering war in Iraq and disgust at the proliferating scandals that have engulfed the Republican Party in the last two years combined to produce a veritable earthquake that will have far-reaching implications for US policy and politics.

Except for a brief period in 2001-2002, Mr Bush has governed America for the last six years with a co-operative, and some would say pliant, Republican-controlled congress. It has endorsed with barely a question the bulk of his policies – from the Iraq war and tough domestic anti-terror legislation to sweeping tax cuts.

But now he faces the final two years of his term with a congress that is at least half-controlled by the Democrats, who will surely make life much more difficult for him, forcing him perhaps to rethink his Iraq and broader anti-terror strategy.

Even Republicans were acknowledging last night that American voters had sent a clear signal that they want a change in direction.

The Iraq war dominated the campaign in much of the country and exit polls left no doubt that voters want to see changes.

Mr Bush will have to come up with a new, urgent strategy that produces results in Iraq, or the chances must be great that the Republican prospects will only get worse. Pressure for a change in personnel, most notably the removal of Donald Rumsfeld as defence secretary, is also likely to grow.

For the first time since they were thrashed by the Republicans in 1994, Democrats secured a majority in the House of Representatives – a clear working majority at that. They gained at least 25 seats from the Republicans – possibly more by the time all the votes in close races are in - easily enough for a comfortable majority of 20 seats or more in the 435-seat House.

In the Senate, Democrats were edging slowly towards an even more dramatic victory. They needed to gain six Republican seats for a majority – a task most pundits had thought was beyond them.

But they notched up gains in Ohio, Pennsylvania, Rhode Island and Missouri, appear to have won Montana and were a nose in front in Virginia pending a probable recount. If the results stand, Democrats will take the Senate, 51-49.

Not since Bill Clinton won re-election as president in 1996 has the Democratic Party really had something to celebrate in a national election. Mr Bush defeated them twice – in 2000 and 2004, and their efforts to recapture congress since 1994 have fallen far short.

The scale of last night’s win shouldn’t be underestimated. Though numerically it is not as large as the Republican "revolution" 12 years ago, when the Democrats lost 54 seats in the House and eight in the Senate, but in many ways it was just as impressive and significant.

Thanks to gerrymandering, redrawing the boundaries of districts to favour incumbent members, far fewer seats in the House are genuinely competitive today than was the case 12 years ago.

In the Senate the party had to take virtually all the seats that were considered at all competitive. They knocked off more than a dozen incumbent members of the House of Representatives and as many as six in the Senate.

What’s more, not a single Democratic incumbent was defeated last night - in House, Senate or governors’ race, an unprecedented event since the advent of universal suffrage. Nancy Pelosi, the liberal Democrat from San Francisco, who will become House Speaker in January and Harry Reid, the Nevada Senator who could end up as Majority Leader in the Senate, have genuine cause to celebrate.

But the true significance of the Democratic Revolution of 2006 has yet to be fully realised. By ushering in a new political geography it could profoundly alter American politics in the run up to the crucial 2008 presidential election.

Democrats swept House and Senate seats across the US Northeast and Midwest - in New York, Rhode Island, Connecticut, Pennsylvania, Ohio and Indiana – making many of those states virtual no-go areas for Republicans.

They also took seats in the traditional Republican strongholds of the Rocky Mountains and the Great Plains, meaning Democrats can now compete there on almost equal terms with their opponents.

In the process they pushed the Republican Party back into its southern redoubt, turning on its head the recent conventional wisdom about American politics, that the Republicans are a national party who can win everywhere, while the Democrats are largely a party of bicoastal elites and a few urban areas in the middle of the country.

Republicans will now have to think hard not only about Iraq but about how they position themselves for 2008.

This repudiation of the President is likely to further embolden potential candidates for the Republican presidential nomination who have urged the party to reach out to the centre ground of politics, rather than rely on its conservative base. These will include John McCain, the Arizona senator, and Mitt Romney, the governor of Massachusetts.

But there are pitfalls for Democrats too. The party now has to actually run part of the US Government – and accept responsibility when things go wrong. This remarkable election will be the last time for a while when the American people will have only one party to blame for their ills.

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