French Interior Minister Manuel Valls becomes the country's Prime Minister after Jean-Marc Ayrault resigned.

President Francois Hollande announced the move hours after his ruling Socialists suffered a bad defeat in the country's local elections, where center-right opposition UMP triumphed and far-right National Front showed unprecedented success, France 24 has reported.

Hollande himself was quoted as saying that Valls would head a "fighting government".

The decision of President Hollande to appoint Valls, who is popular among French voters, is considered to be yet another attempt by Hollande to cope with his dwindling popularity.

France's President was elected in 2012, winning against Nicolas Sarkozy with promises to end severe austerity policies and tackle the financial crisis by promoting growth and raising taxes.

Many in France however think that his measures do not contribute to fighting unemployment and economic stagnation.

Valls, an ethnic Catalan, was born in Barcelona, but a few decades ago obtained French citizenship. He is known for his harsh rhetoric toward migrants and people disrespecting French laws.

Cabinet reshuffles have also been reported likely.

On Monday, some 155 towns of more than 9000 were lost by the Socialists.

President Francois Hollande's party has however managed to keep their hold in the capital Paris and in Lyon, which is the country's third-biggest city.

Socialist candidate Anne Hidalgo won 5.45% of the ballots against conservative Nathalie Kosciusko-Morizet, in a contest which regardless of its results would have led a woman to become mayor of Paris for the first time in history.