A coalition of the party's MPs, peers and councillors vowed to overturn the controversial deal for closer co-operation signed by the two leaders this week.
The new group, called the Campaign For Liberal Democracy, has set up a national network of supporters furious that the pact was agreed without any consultation.
The leaders claimed that their hand had been forced by the revelation in yesterday's Independent that Labour had set up a "dirty tricks unit" to target the Liberal Democrats at local level. The rebels said that the move by Millbank officials proved that Labour had a twin-track strategy to "co-opt and kill off" the party with a view to eventual takeover.
Simon Hughes, Liberal Democrat MP for Southwark North and Bermondsey and the party's health spokesman, is understood to be backing the campaign. He said last night: "The news of a renewed attempt by Labour to have a go at Liberal Democrats on the ground is an expected part of political warfare.
"The issue it raises is whether the strategy of increasing national agreement is either appropriate or acceptable without both parties, by democratic decision, being signed up to delivering it.
"My concern is that the party was forced into making a decision that may not have been taken if there had been a proper democratic process."
Mr Blair and Mr Ashdown stunned both their parties on Wednesday when they revealed the plan to widen the scope of a joint cabinet committee to include areas such as health, welfare reform and Europe.
Opposition to the new deal was also growing last night among Labour MPs and, crucially, large unions normally supportive of Mr Blair. It is understood that the AEEU's leader, Ken Jackson, was "spitting blood" when he heard of the agreement.
However, the severest test for the co-operation pledge will come from the Liberal Democrat rebel campaign, which will use the Internet, local party meetings and forthcoming national conferences to capitalise on grass- roots opposition.
The campaign's first act will be to try to block the deal at the party's Federal Executive meeting on Monday, when it will call for Mr Ashdown to pull out of the committee.
Council leaders from Liverpool, Sheffield and London, where the fight against Labour is the most bitter, will challenge the plan at the Association of Liberal Democrat Councillors' conference in Birmingham later this month. The party's student arm, Liberal Democrat Youth and Students, has also called on Mr Ashdown to justify the move at its annual conference next week.
A party spokesman yesterday denied that the new deal had in any way compromised the Liberal Democrats' ability to oppose the Government or Labour councils.Reuse content