The Cabinet minister won a fifth term in the seat he has held since 1992 after a recount delayed the declaration until 5am.
His rival, Tory Royston Smith, slashed his majority achieving a whopping 10.3 per cent swing.
Mr Denham admitted the result was "a little close for comfort" but said he had been expecting a very tight race and thought he was slightly ahead throughout the count.
He said he was proud of what the Labour Government had delivered for the city but also "saw the things that remained to be done".
Mr Smith, the deputy leader of the city council, launched a bitter attack on Mr Denham, accusing him of negative campaigning over alleged Tory cuts to SureStart centres and tax credits. He insisted: "Had they played with a straight bat we would have won."