The Liberal Democrats lost control of Burnley Council's Daneshouse with Stoneyholme seat - less than three months after their councillor was jailed for election fraud.
But their ruling coalition with the Conservatives has retained its five-seat majority after the Lib Dems took the Brunshaw seat from Labour in the double by-election.
Voters in the two wards went to the polls following the conviction of Lib Dem councillor Mozaquir Ali and the death of Labour stalwart, Coun Donald Hall.
Labour's Shah Hussain, who snatched Daneshouse with Stoneyholme with a majority of just 38, said he wanted the council to hold a full debate on proxy voting.
Ali and fellow councillor Manzur Hussain were jailed for 18 months in November after been found guilty of defrauding the returning officer in connection with proxy votes in 2004.
The newly-elected councillor said: "The whole process of proxy voting is very questionable and is open to abuse.
"First and foremost I want to be a community fighter for the people, solving issues for them locally.
"One of the first issues I want to tackle is about bringing back street lighting.
"There are places in Daneshouse and Stoneyholme which are quite dark."
In Brunshaw, Liberal Democrat candidate Allen Harris won the seat from Labour.
He said he wanted to continue with alley-gating schemes and tackle cars parking illegally on verges.
Mr Harris added he would campaign to stop Lancashire County Council building the proposed Unity College on Lower Towneley Playing Fields as part of the £250million Building Schools for the Future scheme.
He said: "I spoke to Don Hall's wife and told her I wanted the school not to be built on Towneley - the same opinion Don held.
"Don was a very good ward councillor, if I can live up to him I will be fine.
"I just want to be honest with the people and get results."
Coun Hall, a long-serving councillor and former paratrooper, died in December, aged 59, after a heart attack.
The England First Party candidate Steven Smith, polled 141 votes in the Daneshouse with Stoneyholme ward.
It was the first time a candidate from the party had stood in the borough.
Smith received a five-year ban from political office when he was sentenced to six months in prison for election fraud in 2002.
Liberal Democrat leader of the council Coun Gordon Birtwistle said: "I am very disappointed we have lost a seat but we have also won a seat.
"We fought a very hard fight and we still have a big support in Daneshouse and Stoneyholme.
"I probably think the indigenous community were affected by the proxy voting and the Asian community transferred their vote.
"I am sad - but that is politics."
>> HOW YOU VOTED.
Daneshouse with Stoneyholme.
Shah Hussain, Lab 944 Mohammed Malik, Lib Dem 906 Steven Smith, England First 141 Alan Marsden, Con 35 Majority 38 Turnout 52.4%.
Brunshaw.
Allen Harris, Lib Dem 875 Paul McDevitt, BNP 538 Karen Baker, Lab 479 Tony Coulson, Con 90 Majority 337 Turnout 39.9%
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