TORONTO - Ontario's governing Liberals managed to hang on to a longtime Toronto seat Thursday, despite fierce attacks on the party's controversial tax harmonization plan and spending scandals at provincial agencies.

Dr. Eric Hoskins, a physician and former adviser to Lloyd Axworthy, had a landslide victory in a byelection in the midtown riding of St. Paul's which was held by former cabinet minister Michael Bryant for a decade.

The New Democrats and Progressive Conservatives had focused their campaigns on the single sales tax, hoping to capitalize on voter anger about the higher costs the scheme will trigger next July on hundreds of everyday items, from coffee, to fast food and funerals.

But hopes for a protest vote that would dislodge the 10-year Liberal hold on the riding fizzled Thursday as residents elected instead to maintain the status quo.

With all 238 polls reporting after midnight, the Liberals had 13,192 votes, compared to 7,851 for the P.C.s and 4,677 for the NDP. The margin of victory was 5,341 votes.

The byelection was never a litmus test of the Liberals' contentious tax harmonization plan, Premier Dalton McGuinty told reporters after congratulating Hoskins in front of a crowd of his cheering supporters.

"I never saw it as such then and I don't see it as such now," McGuinty said. "Elections are more complicated than one particular issue."

Rather, the victory is an affirmation of his government's progress in areas like education, health care and the economy, he said.

"I don't think for an instant that it means that we're running a perfect government," he added. "But I do think folks understand that we're working as hard as we can."

The merging of the eight per cent provincial sales tax and the five per cent GST next July will increase the cost of many items currently exempt from the provincial levy, provoking the ire of thousands of consumers in both Ontario and British Columbia, which is also moving ahead with a single sales tax.

Many observers believed it could become a hot button issue in the byelection, which Bryant triggered in June when he quit politics to become CEO of Invest Toronto.

The former attorney general resigned from Invest Toronto after a fatal collision involving a cyclist on Aug. 31. He faces two serious criminal charges but has said he is innocent of the accusations made against him.

Hoskins, a Rhodes scholar, is perhaps best known as the co-founder of War Child Canada, a charity that helps children in war-torn countries.

McGuinty remained mum Thursday on whether the rumours were true that his newest recruit was on the fast track to cabinet, saying only that he'll find a "good" place for him.

Hoskins, who thanked Bryant for his support during his campaign, said he found that many voters were confused by the HST issue at the door.

"Perhaps tonight's results demonstrate that people understand what the government is trying to do in terms of economic measures that benefit not only business but also the families of Ontario," he said.

Hoskins was nominated federally in 2007 but was ultimately unsuccessful in the 2008 national vote and failed to unseat Conservative cabinet minister Diane Finley in the rural Ontario riding of Haldimand-Norfolk.

This time around, Hoskins beat out Progressive Conservative candidate Sue-Ann Levy, a feisty city hall columnist at the Toronto Sun, and NDP candidate and lawyer Julian Heller.

Experts had played down the importance of the byelection, saying the Liberals could easily shrug off a loss with still two years before the next provincial election in Ontario.

However, a win or tight second-place finish would have been a big boost for the Opposition Tories, who are keen to break into big cities like Toronto before 2011, said Bryan Evans, a politics professor at Toronto's Ryerson University.

The party has been shut out of the city and currently holds only two seats in the legislature that represent large, urban ridings.

Winning Toronto seats was a major achievement for the party under former premier Mike Harris, who produced two back-to-back majority governments in the 1990s with his right-wing "Common Sense Revolution" agenda.

Patrick Harris, Levy's campaign manager, blamed the Liberal's long-time stronghold on the riding for the loss as well as a summer campaign that led to low voter turnout.

Progressive Conservative Leader Tim Hudak said the Tories would continue to fight McGuinty on the HST as they head toward the next fixed election.

"I have no doubt that people are growing increasingly tired of Dalton McGuinty's tax grabs and a government that is becoming far too fat and comfortable in office," he said.

The Liberal campaign was boosted by a whopping $424,741 in reportable donations during the byelection, while the Tories raised just $13,775, according to Elections Ontario.

St. Paul's has a population of 112,449 including 82,505 eligible voters. The riding, which has at one time been Liberal, Conservative and NDP, has a mixed-income population with some high-end neighbourhoods and some middle-class to low-income.

Bryant took the seat in 1999 by defeating Tory cabinet minister Isabel Bassett by 4,782 votes.

The win leaves the standings in the Legislature at 72 Liberals, 25 Conservatives and 10 New Democrats.

-- With files from Sunny Freeman