The Spanish government did not disperse demonstrators, including the largest group camped out in Madrid''s central Puerta del Sol square opposite city hall on Monday, a day after ruling Socialists suffered a crushing defeat at the hands of the conservatives in local and regional elections.

Protest camps, set up mainly by young people, began to spring up in cities around the country a week ago and the protesters on Sunday voted to stay in the square until at least 29 May.

The election came against a backdrop of widespread discontent.

Organizers of the protests have said that they had no party affiliation, and were not trying to affect the election outcome in any way, and were not even urging people to abstain from voting.

However, the results of the elections came as a shock to some residents in Madrid who believed the protesters were able to affect the results.

"The results of the elections left me (astonished), well I just don''t understand it. I can''t get it. So many people here and they have not voted for either of the main parties, but that has not been reflected at all," Mila Balinas, Madrid resident said.

On Saturday the protesters defied a government ban on gatherings the day before an election.

The growing protest movement reflects the strong disillusionment felt by Spaniards toward a political system they say favors economic interests and political fat cats in both major parties on the right and left over ordinary people.

Prime Minister Jose Luis Rodriguez Zapatero said the result on Sunday was due punishment of his government for the state of the economy - the jobless rate is a eurozone high of 21.3 percent.

But he said he had no plans to move up general elections, which must be held by March of next year, and pledged to press on with job-creating reforms despite the loud outcry of opposition to his party.

The win for the conservative opposition Popular Party puts it in even a stronger position to win the general elections and return to power after eight years of Socialist rule.

In what Spanish media said was the worst performance on record by the Socialist Party in local and regional elections, the numbers reflecting the
loss were stunning: the conservative Popular Party won at the municipal level by about two (m) million votes, compared to 150-thousand in its win in 2007, and in 13 regional governments that were up for grabs, Zapatero''s party lost in virtually all of them.

Zapatero attributed the results to the state of the economy, which is struggling to shake off nearly two years of recession, and conceded many Spanish families are suffering.

But he did not mention snowballing protest rallies that have riveted Spain for the past week and filled squares in Madrid and other cities.

"The youth nowadays think that there is a big difference between their requests, their movement, and the electoral world," Miguel Martin, member of ATTAC ( Association to Control Economic Transactions to Help Citizens) said.

The Socialists had widely been expected to do poorly on Sunday.