Lib-Dems to refuse coalition government if hung Parliament

Nick Clegg, the Lib Dem leader, is set to concentrate instead on extracting support for key policies in return for helping one of the parties form an administration, The Guardian claimed.

A result of no overall majority in the Commons is seen as a distinct possibility in the forthcoming election for the first time in many years.

The issue came to the fore especially in recent weeks as a string of polls showed Labour closing the gap on the Tories.

According to reports, Mr Clegg has no interest in taking a government job but would throw a lifeline to one of the two main parties in return for:

* A pupil premium to direct extra investment to disadvantaged children;

* Tax reform to take four million out of tax and raise taxes on the rich;

* Rebalancing of the economy away from centralised banking with a new emphasis on a greener economy;

* Reforms of the voting system and a democratically elected House of Lords.

A Lib Dem spokesman said: "No decision has been made about hypothetical situations after the election.

"The people decide who the government should be and we are focusing on getting across our message about creating a fairer society for all."