Mr Farage predicted his party could hoover up 200 extra council seats by the end of the day - and said European election results due Monday could be even better.
Pointing to significant wins in Essex and areas such as Rotherham, he suggested the "Ukip fox is in the Westminster hen house".
"There are areas of the country where now we have got an imprint in local government," he said. "Under the first-past-the-post system we are serious players."
The comments came after a disappointing night for Labour, where the party failed to secure control of councils in spots such as Thurrock, considered crucial for a general election victory, although results in London were more impressive.
Shadow Foreign Secretary Douglas Alexander said the country appeared to have entered a period of "four-party politics".
The Conservatives were set for heavy losses, with Education Secretary Michael Gove admitting voters had turned to Ukip to send a "very clear message", and the Liberal Democrats also suffered.
With over a third of councils having declared, Ukip had gained nearly a hundred seats - already exceeding expectations of around 80 wins.
They included 11 in Basildon to ensure it went from Tory to no overall control, and five in Thurrock to rob Labour of overall control.
In the north, Ukip showed it could pose a threat in the traditional strongholds of Ed Miliband's party, taking 10 of the 21 council seats up for election in Rotherham.
So far Labour has boosted its councillor numbers by around 70, the Tories have lost some 110 and the Lib Dems more than 60.
Mr Farage said he believed many people would have stuck by long-standing council candidates representing the three main parties, but voted Ukip in European elections.
"Looking at the average vote share across the country and without wanting to count any chickens before they are hatched, it looks pretty good," he added.
Mr Gove told Good Morning Britain: "We know that a number of people have voted for the United Kingdom Independence Party in order to send a very clear message.
"They want to make sure that the Government delivers on the policies of controlling immigration, making sure that we reform our welfare state, making sure that we get a proper referendum in Europe and the instructions from the electorate are loud and clear.
"We appreciate and understand why people have voted Ukip, and in government we will make sure that we deliver on the priorities that people have clearly set out."
Asked if he would congratulate Ukip candidates on their success, he replied: "Yes, I would like to congratulate all of those candidates who won and wish them well when they serve the public and I would like to commiserate with those candidates who lost."
David Cameron was facing renewed calls from Tory backbenchers to work with Ukip in 2015 to ensure a referendum on Europe.
Jacob Rees-Mogg told the BBC: "In a first-past-the-post system, if they don't get those votes into one pot, then both those sides end up losing."
Mr Miliband also came in for heavy criticism from some of his MPs, with Graham Stringer condemning problems with "both the presentation of our policies and the organisation of the campaign".
Former minister David Lammy said the party should have done better in places such as Swindon, conceding that voters were "swallowing" Ukip's message on immigration and Europe.
But Mr Alexander insisted Labour could win the general election based on the results coming in overnight from key battleground seats. The party has seized control in Hammersmith and Fulham, previously a flagship Tory authority, and is expecting positive results in Merton and Croydon.
He told BBC Breakfast: "We are very far from complacent. We recognise the alienation and the anger that has found expression in a lot of people voting for Ukip last night but we still believe that we are well placed if we do the right things and we take the right steps in the coming 12 months to win that general election."
Deputy Leader of the Liberal Democrats Sir Malcolm Bruce played down his party's losses and stressed it intended to be a "major force" in British politics for the foreseeable future.
He told BBC Breakfast: "It is obviously disappointing to lose councillors, particularly those who have worked hard in their community and may have been replaced by those who haven't got a track record.
"But actually we are pleased that where we have targeted our resources, particularly in held seats or key seats, we have actually had very good results.
"That's really very important for us. Getting an even share across the country doesn't deliver seats, getting them in the seats that matter is what matters to us."
Asked if he was concerned the Lib Dems were falling away from the top three, he replied: "I'm not sure that we are yet," and gave the example of Eastleigh where he said the party had been able to "take on" Ukip.
He added: "We recognise that if you are going to be an influence in British national politics then winning seats at Westminster is what matters. The results today say we can go on doing this."
The Gordon MP accepted the Lib Dems had taken a "hit" because of the "difficult decisions" they had made in Government.
But he continued: "We are getting to a point now where the recovery is taking hold and people can see the Lib Dems have delivered an increase in the tax threshold, the biggest reform of pensions since Lloyd George, boosts for apprentices and a boost for children from under-privileged backgrounds. None of that would have happened without the Liberal Democrats.
"It looks very unlikely that any party can win an outright majority at the next election. We want people to understand the Liberal Democrats have been a positive force for good.
"We will very robustly say to people, we have helped this recovery to take root, we have made it a fair and balanced recovery and it is in your interests to ensure the Liberal Democrats are there to see it through. Labour can't do it on their own, the Conservatives can't do it on their own and Ukip certainly can't do it.
"Our ambition is to be a major force in British politics for the foreseeable future. Going into government is difficult. Of course you have to take unpopular decisions but we don't regret them.
"We believe we have made a positive difference. We have grown up as a party and helped to deliver a fairer society, a stronger economy and people are beginning to feel they can get on in life. They owe that to the Liberal Democrats. That's our mission."
Mr Alexander told BBC Radio 4's Today programme: "I think there is not just a whole group of people who feel left behind by the economy but locked out of politics.
"There is a deep anger and alienation there and the votes that we have seen for Ukip overnight are in part a reflection of that reality.
"The challenge is how does a party like the Labour party seek to respond? And I don't think simply politics as usual is an adequate response to trends that didn't build up in the last few days, but actually have been building up over decades."
Asked if Britain was in a new political era, he replied: "I'm a Scottish Member of Parliament. We have lived with four party politics for four decades in Scotland. In that sense, let's see."
Mr Gove ruled out the possibility of a future electoral pact between the Tories and Ukip.
He told Today: "I don't believe that what we need to do is to have a pact, absolutely not."
"What we need to do is recognise that Nigel Farage and others have articulated the concerns of a section of the electorate," he added.
"Those concerns and that anger is legitimate."
Votes were cast throughout the UK for the European Parliament contest to return 73 MEPs, while more than 4,000 council seats at 161 English local authorities, including the London boroughs and those in Northern Ireland, were up for grabs.
Labour had sought to play down expectations by suggesting a good haul would be increasing numbers by 200, but experts had estimated they should be looking at more like 500. There were some bright spots, including taking control of Cambridge and, in London, securing Hammersmith and Fulham, Redbridge, Merton and Croydon.
Labour sources argued that while it had been hit by Ukip outside of the capital, the Conservative and Lib Dem vote had "basically collapsed into" Mr Farage's party.
Tory sources anticipate having lost 300 seats by the end of the day, but stressed that would still leave them the largest party in local government.
"We have not taken the hammering that governing parties normally take at this stage in the cycle," a source said.
The Lib Dems suffered another pummelling, and are seemingly on track to lose around half the council seats they held.
Tories have claimed Kingston, the back yard of Energy Secretary Ed Davey, and Nick Clegg's party lost control in Portsmouth amid a strong Ukip showing.
A rare piece of positive news saw the Lib Dems tighten their grip in Eastleigh - the parliamentary seat they successfully defended last year after the resignation of former Cabinet minister Chris Huhne.