Cable snubs Cameron's alliance bid

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With the Lib Dems due to announce the outcome of their leadership contest on Tuesday, Mr Cameron said that he believed the two parties should work together to pressurise Labour into decentralising power from Whitehall.

But the proposal was swiftly dismissed by the outgoing Lib Dem acting leader Vince Cable, who said that the Conservative leader appeared to be living in "cloud cuckoo land".

"The Liberal Democrats will continue to work with other parties on issues where we have common ground and can work together in the national interest," he said.

"However, this is not a serious proposal and David Cameron clearly lives in cloud cuckoo land.

Mr Cameron's message - in an article released to The Observer - appeared designed to appeal to both Nick Clegg and Chris Huhne, the two contenders for the Lib Dem succession.

Mr Cameron suggested that the Green Party could also be brought into the alliance which would enable them to pursue environmental objectives through the "empowerment" of individuals and communities.

"I've always believed that political parties, even though they may have serious disagreements over many aspects of policy, should work together in areas where they agree," he said in the article, to be posted on his website.

"So I hope that in 2008 the Liberal Democrats and the Green Party will join us in putting pressure on the government to decentralise power, and that together we can create a new progressive alliance to decentralise British politics.

"This modern decentralisation agenda is key to achieving social and environmental progress. We will never win the fight to make British poverty history as long as we rely on top-down, centralised state mechanisms."