Charles Kennedy, the Liberal Democrat leader, is poised to scrap the co-operation pact framed by Tony Blair and Paddy Ashdown after consulting his MPs this week.
Mr Kennedy, who scored his party's best election result for more than 70 years, will broach withdrawal from the Joint Cabinet Committee on a parliamentary "away day" where the future direction for the Liberal Democrats' stance towards Labour will be discussed.
He wants to resolve the nagging issue of Liberal Democrat-Labour relations before the party's annual conference in September. He is said by aides to be prepared to withdraw from the committee, in which the Prime Minister and Cabinet members sit with the Liberal Democrats to discuss policy.
Most Liberal Democrat MPs are said to support Mr Kennedy's stance. They fear that continuing to co-operate formally with Labour could affect their independence in the Commons and compromise their policy of "effective opposition". Senior Liberal Democrat sources said the "mood has changed since the election".
One frontbench MP said: "There is very little appetite in the party to continue. It's now a choice between whether we allow it to fizzle out or make a dramatic statement and withdraw over lack of progress over Lord's reform and other Labour promises." The Liberal Democrats' withdrawal from the committee would bring an end to Mr Blair's dream of realigning the centre-left of British politics to keep the Tories out of power. But there are signs that with his huge Labour majority, Mr Blair may be abandoning his policy of wooing the Liberal Democrats while trying to create an American-style Democratic party free from left-wing ideology.
Mr Kennedy has also come under pressure since his election success to bolster his new policy of attacking the Government on public services by severing formal ties with Mr Blair.
The Government has angered the Liberal Democrats by going slow on the reform of the House of Lords. It has failed to fulfil its promise to set up a joint committee of both Houses to consider the matter. Mr Kennedy is said to be angry that Mr Blair's promise to move forward with the second stage of Lords reform has been shelved.
The committee and its sub-committees which at their height produced joint proposals on foreign affairs, Europe and the Constitution have stalled over the past year. It has not met once since the election, although Downing Street announced that it was among the Government's ministerial committees last week.
The parliamentary away day in Londonis the final opportunity for MPs to discuss the future direction of the Government together.Reuse content