Although both parties deny there are any pacts or agreements, when voters go to the polls in local elections today there will be many areas with a tacit Lib-Lab understanding.
From Hertfordshire, where individual wards are divided up between the parties, to a swath of councils in the South-west, where Labour is swamped by Liberal Democrat support, activists have come to "arrangements" on the ground.
The first concrete evidence of such collusion was found yesterday when it emerged that leaflets had been sent out in Castle Point, Essex, urging Liberal Democrats to vote Labour. Castle Point is seen by both Labour and the Tories as a key battleground and a test of the Government's popularity in the South as a whole. At the last local elections, in 1994, the normally solid Conservative council fell to a Labour landslide.
However, although more than a dozen Liberals contested seats last time, none will today, fuelling Tory claims of an obvious Lib-Lab agreement.
One Labour leaflet says the Liberal Democrats have put up no candidates for the council and argues: "New Labour is closer to Liberals, in both principle and policy." Another quotes a leading Liberal Democrat official saying: "Finding ways of fighting moderate Labour councils and MPs ... is increasingly difficult".
Such an agreement would directly contravene a Millbank edict issued to all local parties in March that stated: "On no account should any agreement, formal or informal, be entered into with other political parties."
Michael Ancram, the Tory party chairman, seized on the leaflets as proof of suspicions that Lib-Lab agreements existed on the ground, despite the official protestations of the parties. "This leaflet demonstrates there is only one real opposition party left in Britain," he said.
A Liberal Democrat spokesman vehemently denied the existence of a pact and claimed that in cities such as Sheffield and Liverpool the parties were clear opponents. Labour also denied there was any deal but admitted the parties were closer to each other than to the Tories.