Closer relations with the Government also caused rumblings of discontent from former Liberals who do not want to see their party entering any pacts with the Blair government. "We are giving Paddy a sweetie, but this is the last example of co-operation we will allow," said a veteran politician.
Mr Blair privately told Liberal Democrats at a meeting of the joint co- ordinating committee in the cabinet room that there were other areas where he wanted to see co-operation extended. It is believed this includes social security policy.
Mr Ashdown angered members of the parliamentary party by "bouncing" them into closer co-operation last year, and some MPs are forming two rival camps behind Charles Kennedy, a former Liberal Democrat president, and Simon Hughes, one of the most outspoken critics of closer co- operation.
Critics fear being smothered by the embrace of the Government. But Mr Ashdown, who attacked Mr Blair over the NHS this week, is keeping his critics in check by insisting there is no carte blanche agreement for co-operation with the Government.
"It is being tightly limited to areas where we can show that it has an advantage, and where we can deliver results," said a source close to the Liberal Democrat leader.
Mr Ashdown knows he is playing for high stakes in seeking closer co-operation with Mr Blair, short of a coalition. In a letter last month he told Mr Blair his position would be made untenable unless he could deliver some form of proportional representation for the coming European elections. He had to settle for the closed-list system, which yesterday reached the Statute Book.
Mr Blair and Mr Ashdown have agreed to put off a referendum on proportional representation for Westminster elections until it could be won. Lord Jenkins of Hillhead, former SDP leader and chairman of the Government's independent commission on the voting system, yesterday said it may not be held until after the next general election, in spite of the Labour manifesto commitment to hold a referendum on PR.
The Deputy Prime Minister, John Prescott, opposes any move towards coalition but has told friends he is prepared to see co-operation with the Liberal Democrats where it makes sense.
Mr Blair faced renewed criticism from his own back benches. Gordon Prentice, MP for Pendle, said the party was getting "very weary about endless speculation about Lib-Labbery" and asked what precisely Mr Blair had in his mind.
"Can you ask to prevail upon him to come to the Commons and make a statement about this deal?" he said to Margaret Beckett, the Leader of the Commons.
Dennis Skinner, MP for Bolsover, said the Lib-Lab pact in the 1970s had "ended in tears" because the Liberals had "ratted" on it. "We don't want a repeat performance; sack the lot," he said.
Pointing to differences between Labour and the Liberal Democrats over a range of issues such as devolution, Lords reform, defence and foreign policy, he added: "Some of us are fed up to the back teeth of the Liberals wanting their cake and eating eat. It is high time a message was passed to the Prime Minister and anybody else that it is time they put a stop to it."