Funnily enough the Tories got more votes in England not because they were more popular than Labour, but because they were and still are so hated!
I don't see how having no credable opposition party could be very good for British politics, or even for the core values of the Labour party. I am from the core of Labour support (South Yorkshire) and I would be a Labour voter, but I do not like the values of New Labour and much prefer Old Labour. I even prefer the Tories over New Labour.
However, because I voted in Cambridge this year I voted tactically for the Lib Dems to unseat a Labour MP (Anne Campbell). I'm proud to say we were sucessful, achieving a 10.5% swing. I suspect many Tory voters also voted tactically for the Lib Dems too to try to drive out Labour MPs so you can't just use the tactical voting argument against them. It's simply a case that few people voted tactically for Labour.