The Labour Party’s grip on councils across the country was loosened yesterday after MSPs voted to introduce proportional representation in time for the 2007 local authority elections.

The Local Governance (Scotland) Bill will deliver a single transferable vote system (STV) which will replace the current first-past-the-post mechanism.

The legislation, passed by 96 votes to 18 with two abstentions, also reduces the age of eligibility to be a councillor from 21 to 18 and removes a ban on council employees standing for election.

The bill also establishes an independent remuneration committee to consider a replacement of the current expenses system, pension arrangements, and a one-off severance scheme for councillors standing down in 2007.

The Scottish Liberal Democrats, who secured PR based on three- and four-member wards in their post-election coalition deal with Labour last May - despite bitter opposition among Jack McConnell’s party - heralded the bill’s passage, saying it would deliver "fair votes".

However, they were criticised by some opposition parties who lost their bid to make the system even fairer, after experts warned that by not allowing five-member wards the Executive’s system was the least proportional system of STV in the world.

Helen Eadie and Elaine Smith, Labour backbenchers who lost a last-ditch bid to force a referendum of the Scottish population on whether to allow PR, joined the Tories to vote against the bill, while party colleagues Bill Butler and Paul Martin abstained.

The SSP leader Tommy Sheridan said the proposal was "the worst of all worlds".