Such an alliance would be the 'only way' to defeat the racist BNP which had made further inroads since the election last autumn of Derek Beackon as its first councillor. Liberal Democrat politicians said its candidates would also stand down in preference to those selected by a mixture of church leaders and community groups.
Peter Hughes, leader of Tower Hamlets Liberal Democrats, said the agreement would cover the three seats most at risk from the BNP. Victory would give the racist party control of the neighbourhood's pounds 23m budget.
'The problems on the Isle of Dogs are serious and the threat of a BNP victory is real. We must respect the perception of local people that the established parties have let them down,' he said.
The appeal, which had the personal backing of Paddy Ashdown, the Liberal Democrats' leader, got short shrift from both Labour and Conservatives who said they suspected the motivation behind the statement.
Labour, which won all three seats in the 1990 election before losing one in September to Mr Beackon, said the proposal was hard to take seriously seven days before nominations closed.
Liberal Democrat candidates finished in a close second place behind Labour in Millwall in the 1990 elections and both parties recognise the danger of splitting the anti-racist vote, allowing the BNP victory.
Jack Straw, shadow environment secretary, said no private approaches had been made prior to the announcement from the Liberal Democrats, as had happened prior to an all-party code of conduct for the election initiated by the Commission for Racial Equality.
'The suggestion of an electoral deal assumes that people's votes can be moved around the political chess board, without their consent, by the main political parties,' he said. 'The best way to fight the BNP is to defeat them through the normal democratic process. Suspending that process and creating no-go areas for the main political parties in places like Millwall risks handing further legitimacy to the BNP.'
Previous campaigning by the Liberal Democrats in Tower Hamlets was censured by an internal party inquiry which said some activists had 'pandered to racism'. Mr Hughes defended plans by the Liberal Democrats to replace Asian council candidates in Bethnal Green and said the party's list of candidates had now been completed. Two Asians had withdrawn voluntarily in the Weavers ward and had been replaced by one white candidate and one Afro-Caribbean.
The politics of Tower Hamlets overshadow the launch of the local election campaign by the Liberal Democrats in London.
David Rendel, the party's local government spokesman, said Liberal Democrats hoped to expand from their base of three councils, Tower Hamlets, Richmond and Sutton. The party is reluctant to identify specific targets but is expecting large gains in Harrow, Southwark and Kingston.