Ukip leadership candidate Suzanne Evans lost her deposit in the race to replace Diane James despite coming in second place.

The party’s former welfare spokesperson and vice-chairman won 19.3 per cent of the vote – just shy of the 20 per cent required to have the £5,000 deposit returned – after coming a distant second to the eventual winner, deputy leader Paul Nuttall who won with 62.6 per cent.

John Rees-Evans – an ex-soldier notorious for claiming a “gay donkey raped his horse” – came in third with 18.1 percent.

Ms Evans won just 2,973 votes out of a total 15,405 – reflecting the tough year she has had after falling out with Nigel Farage.

Ukip suspended Ms Evans from the party in March after she called Mr Farage, who resigned as leader in July after the EU referendum, “divisive”.

This means she was unable to participate in the first leadership contest in October which was one by Ms James – who then resigned 18 days later.

Ms Evans had the support of Ukip’s only MP, Douglas Carswell, who has also found himself at odds with Mr Farage – who is supported by the majority of the party faithful.

The second leadership contest attracted a considerable amount of controversy as the previous frontrunner – Steven Woolfe – dramatically resigned from the party altogether after getting into a fight at the EU parliament in Strasbourg which lead to him being hospitalised with bleeding on the brain.

Key Faces of UKIP Show all 11 1 /11 Key Faces of UKIP Key Faces of UKIP Nigel Farage Getty Key Faces of UKIP United Kingdom Independence Party (UKIP) Migration spokesman Steven Woolfe addresses supporters and media personnel in central London Getty Key Faces of UKIP Robert Kilroy-Silk, former television presenter and newly elected member of the European Parliament for the UK Independence Party (UKIP), shows a placard against the European Constitution in front of the Houses of Parliament Getty Key Faces of UKIP Mark Reckless, Director of Policy Development addresses party members during the UK Independence Party annual conference at Doncaster Racecourse Getty Key Faces of UKIP Gerard Batten MEP poses with protesters outside parliament Creative Commons Key Faces of UKIP Diane James gives an address at the UKIP Autumn Conference in Bournemouth Getty Key Faces of UKIP Douglas Carswell MP speaks to party members and supporters during the UK Independence Party annual conference Getty Key Faces of UKIP Suzanne Evans, Deputy Party Chairman of UK Independence Party (UKIP) speaks during the launch of UKIP's election manifesto Getty Key Faces of UKIP Peter Whittle, the UK Independence Party Member of the London Assembly, is interviewed in central London Getty Key Faces of UKIP MEP Mike Hookem during a visit to Concept Metal Products & Co Ltd Getty Key Faces of UKIP Paul Nuttall, Deputy Leader of the UK Independence Party speaks at a Say NO, Believe in Britain debate at Carn Brea Leisure Centre in Pool near Redruthon Getty

The MEP – who had been prevented from standing in the first election after submitting his nomination papers 17 minutes late – called the party “ungovernable” and said it “lacks direction, it lacks a purpose and it lacks any semblance of professional organisation”.

In his victory speech, Mr Nuttall said the party must unite to replace Labour as "the patriotic party of the working people".

He said the focus had to be on targeting Ukip resources in certain areas where they were most likely to make an impact – such as Labour's former heartlands in the post industrial north.

The 39-year-old said those who wanted to fight the "battles of the past" no longer had a place in the party and vowed to reposition the party as "the party of common sense".

The anti-immigration party has struggled to define itself following the EU referendum on 23 June after the Conservatives declared themselves to be the party of Brexit.

But Mr Nuttall declared the party would continue to hold the Government to account saying: "If we don’t get real Brexit, and if we continue to have freedom of movement and we’re not allowed to sign our own trade deals and we still have to pay a membership fee to Brussels, and we still have to comply with EU regulations and directives – ie we stay in the single market – then I’m afraid that is a betrayal".

His first challenge will be keeping the party afloat financially as it was revealed it is close to financial ruin as following a fall in membership and a decline in donations.

According to the Mail on Sunday, membership of the party has fallen by around 12,500 – meaning a loss of £300,000 worth of annual revenue – and its major donor Arron Banks is said to be poised to fund his own campaign to leave the EU independent of the political party.