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BERLIN, Germany (CNN)-- German Chancellor Gerhard Schroeder's Social Democrats have suffered crushing defeats in two state elections.

Voters used Sunday's poll to vent their anger at high unemployment, tax hikes and near-recession.

Not even Schroeder's opposition to a possible Iraq war, which is popular at home, was enough to offset public disgruntlement over the economy four months after he was re-elected.

The SPD suffered its worst results since 1945 in Schroeder's home state of Lower Saxony and in Hesse, television projections showed after polling booths closed at 6 p.m. (1700 GMT).

Ten million people were eligible to vote in the two states, the first test of sentiment since the September ballot.

Conservative Bavarian state premier Edmund Stoiber, who was narrowly beaten by Schroeder in the September general election, said: "This is a vote of no confidence in Schroeder and his government.

"We're going to use this result to enforce a change in German politics."

Lower Saxony governor Sigmar Gabriel, conceding defeat for the Social Democrats, told the Associated Press: "It's not an easy night. We've lost the election to the Christian Democrats with very, very bad results."

Education Minister Edelgard Bulmahn said: "People are very worried about the economic situation.

"We take this signal of dissatisfaction very seriously."

One projection by the Infratest polling institute on ARD television showed the Christian Democrats (CDU) surged to 48.3 percent in Lower Saxony from 35.9 percent in the last election in 1998, with the SPD crashing 15 points to 33.0 percent.

In the central state of Hesse, the CDU held on to power with an increased majority, scoring an absolute majority of 50.1 percent, up from 43.4 percent in the last election in 1999.

The SPD plunged to 27.7 percent from 39.4 percent, the poll showed.

The double defeat for the Social Democrats could increase pressure from the conservative opposition and inside Schroeder's party for bolder economic reforms, such as loosening the tightly regulated labour market and reducing social-welfare benefits.

Meanwhile, jubilant conservatives celebrated their victory.

"The poor picture of the governing coalition in Berlin played a role," Christian Democratic lawmaker Friedbert Pflueger said.

"It's a great day but also a large responsibility. Many voted for us for the first time."