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It is hard to remember a ministerial career so short which has made more impact or a resignation that has been greeted with such widespread regret.

David Laws clearly decided that he could not simultaneously deal with outing himself, defending himself against charges of abusing expenses and being the public face of the coalition's cuts.

His departure robs the government not just of a powerful partnership at the Treasury but of another vital pairing behind the scenes - that between the new Chief Secretary Danny Alexander and Oliver Letwin who shaped, and have been managing, the coalition's policy agreement.

This morning I wrote that my hunch was that David Laws could survive. I should have paid more attention to my previous paragraph which made clear that although he'd acted to protect his privacy he'd done so, ultimately, at public expense. A position which he obviously felt he could not justify.

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David Laws is a millionaire who gave up a career in the City to become a Lib Dem MP with - or so it seemed at the time - no prospect of power. So his offer to pay back £40,000 hardly proves the absurd cliche "they're all in it for themselves, they're all the same".

His explanation for the mess he's now in seems to be that he claimed rent and expenses for living with his partner because to do otherwise would reveal to family and friends his private secret - that he was gay.

This sounds believable but will not protect him from the anger his leader sought to exploit when he condemned politicians for "living in a parallel universe".

Mr Laws clearly was, in his living arrangements, at least trying to maintain a parallel and private universe. His critics will point out that he was doing so at public expense - although he could easily have made other much more expensive arrangements - and possibly in breach of the rules.

My hunch is that he will keep his job but lose something else he valued much more - his privacy and a reputation for being a representative of a new and different politics.

PS: I'm off for a week's half-term break.

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"In a coalition, in government clearly it is going to take a lot more work, a lot more conversation, a lot more discussions."

You can say that again.

that the style of party leadership he pursued in opposition is already not working for him in government. He described that style as sometimes "quite forceful". His backbenchers and, indeed, many of those beyond his immediate inner circle would describe it in rather less flattering terms - "cliquey... exclusive... dictatorial" are words which are often used.

David Cameron has, so far, proved to be remarkably adept at managing the coalition he's created. He's proved rather less so with the Conservative coalition. In the space of a week they have , picked as its chairman a man who resigned from the Cameron front bench and are now .

For years supporters of strong majority governments warned that hung Parliaments would lead to deals done in "smoke-filled rooms" away from the public gaze. Indeed, Team Cameron re-wrote Tory tax plans behind closed doors in a matter of days without consultation with the party in order to seal the coalition deal when the team agreed to drop its own plans to cut inheritance tax and to adopt Lib Dem plans to increase CGT.

However, now the prime minister is being forced to re-negotiate that deal in public with both his own party and the Lib Dems.

David Davis, John Redwood, Michael Forsyth and many others in Parliament are, with the help of and , demanding that any rise in capital gains tax should not hit "ordinary people" who've saved for their retirement by buying shares or a second home. It should, they argue, be targeted at the super-rich who choose to pay themselves in yachts or cars, houses or shares in order to avoid the top rate of income tax and thus can, in theory, pay less tax than the people who clean their mansions. The solution they advocate is a taper so that the longer you hold an asset the less tax you would pay when you sell it.

Vince Cable responded instantly this morning by arguing that the government's CGT plans were an "issue of fairness" before adding that this was "not an argument between the coalition parties but more between Conservative backbenchers and others". As a quick learner of this particular political game, Mr Cable says he's arguing for the policy pursued by Nigel Lawson and Mrs Thatcher ie equal rates for income and capital gains tax.

The prime minister and his chancellor will soon have to choose who to anger, who to delight or, more likely, how to compromise. David Cameron's words this morning about needing only to "raise modest amounts of income" suggest he's looking for a way out. Of course, if he does compromise he will raise less money to cut taxes for ordinary workers - by raising the income tax threshold - as his coalition has promised. What's more, none of this raising modest sums to give back in tax breaks will do anything to cut the deficit.

If it's this much trouble getting a deal on a modest tax change, just imagine what it will be like negotiating with both the coalitions Mr Cameron now heads on major constitutional change, major welfare reform and major spending cuts.

This coalition looks set to be, as one of my illustrious predecessors once put it, "good for trade" - if, of course, your trade is political journalism.

Or, as the prime minister pointed out when he picked the horses for the Today programme's racing tip, it will either be a "Daring Dream" (running in the 3.50 at Ayr) or or a "Midnight Fantasy" (running in the 3pm at Wolverhampton).

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Can you remember a Queen's Speech? Not the Royal carriages or the ermine and tiaras or Black Rod having the door slammed in his face. The speech itself. No, not sure I can either.

Every government tries to write a narrative to connect the 20 or more disparate pieces of legislation which Her Majesty announces. Every government fails to make that narrative stick in the mind.

This time round the themes are freedom, fairness, responsibility. Not memorable but revealing nevertheless. "Freedom" is the word this coalition feels it can unite around. Conservatives and Liberal Democrats are anti what they call "the Big State" - whether it's issuing ID cards or a prescriptive curriculum. "Fairness" is Nick Clegg's favourite word and "responsibility" David Cameron's.

What this Queen's Speech won't tell you is how they'll resolve the inevitable tension between those three words.

Take the public services. The Tory guiding principle here is to harness consumer power. Look at schools. Their belief/hope is that once more schools are allowed to become academies and, therefore, free from much local council control and once new so-called "free schools" are created then competition for the custom of parents will encourage innovation and drive up standards in education.

So, too by allowing patients and their GPs to deploy the money which will be spent on their care in the NHS.

In welfare and prisons, private companies, charities and other local bodies will be paid by results for what they do - again, it's argued, encouraging innovation and improving results. All this can be defended on the grounds that it will give greater freedom and responsibility to those running public services and the users of them.

However, critics will be quick to point out that it may lead to bigger differences between good and bad public services - that term "two-tier" will no doubt return to the political lexicon. They will argue that de-centralised services often waste money - on, for example, high salaries in academies and foundation hospitals - and siphon it away from poor areas to richer ones.

Thus, promises of freedom and responsibility may soon clash with that promise of fairness. This government will be defined not by the list of bills it publishes but how and whether its competing aims can be reconciled.

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They are not the first and they will certainly not be the last.

They were anticipated and we know much tougher decisions are still to come.

Yet of government spending cuts was a moment of real significance.

The last government did begin to cut departmental spending - most noticeably the universities' budget - but it tended to hide this behind talk of making efficiencies or re-prioritising government programmes.

In contrast, this new government has chosen to be defined by its determination to cut. Thus, the new chief secretary - a Liberal Democrat - used the word "draconian" today and predicted that "a shockwave" would pass through Whitehall.

It's an old truism that governments with money centralise and claim the credit for spending whereas governments with no money decentralise and pass on the blame for cuts.

So, it is with today's announcement.

Be in no doubt, however, that these cuts are real - departmental and council budgets are lower than they were - and by the end of the year they will be much much lower still.

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Before he came to office David Cameron told his party to stop obsessing about Europe.

Yet within days of moving into Number 10 he finds himself at the centre of a European economic crisis and facing calls for treaty amendments to prevent a repeat of it.

As a result the Prime Minister is now having to manage not one but three different coalitions.

The agreement between the Conservatives and the Liberal Democrats may have ruled out further transfers of powers to Brussels without a referendum but the Lib Dems will not relish headlines about Britain threatening to use the veto.

The Tory party is itself an uneasy coalition of Euro sceptics, Euro pragmatists and those who want Britain out of the EU altogether.

And, of course, the European Union is itself a coalition fraught with its own tensions.

The Prime Minister came to Berlin today and last night to Paris as part of an early European charm offensive - he'll need all the charm he can muster to try to keep all three coalitions he's handling happy.

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Paris: On the day David Cameron moves to reassure Daily Mail readers that they , it is worth noting that Europe is still a problem for him, for his party and for his coalition.

, President Sarkozy gushed out warm words of welcome. He said he was "touched" by the "great honour" of being chosen for the new prime minister's first international visit. However, he did little to mask the gulf between they two men and their attitudes towards Europe.

Sarkozy reportedly once told Gordon Brown: "I shouldn't like you. You're boring, you're Scottish, you don't like women and wine - but I love you, Gordon."

"Not, though," he hastily added, "in a sexual way."

When reminded of this sentiment at last night's news conference, he said his thoughts were with Gordon and Sarah, that he was not the one who appointed Britain's prime minister and that he was getting to know and like David Cameron.

He's taking his time about it. After all, the two first met five years ago. The truth is that there are many reasons Monsieur Sarkozy should not like Mr Cameron. One is a chippy outsider, the other an effortless member of the establishment. The prime minister will remember that the president's Europe minister dubbed his decision to withdraw the Conservative Party from the European People's Party .

However, the two men are both from the centre-right, are deficit hawks and did agree, I'm told, that now is not the time to re-open the debate about Europe's institutions.

Not so the host at Mr Cameron's next stop in Berlin. Chancellor Merkel wants and needs something in return for bailing out the Greeks. , has had recent front pages screaming "Once again, we are the idiots of Europe" and "Do we need our D-Mark back?"

, even if that means another treaty. Frau Merkel's irritation with the man who should be her political soul-mate is such that she refused to meet David Cameron on a recent trip to London - a fact that President Sarkozy gleefully pointed out last night.

The reason all of this matters is that David Cameron now has not one but three coalitions to manage when it comes to Europe. Not just the Lib-Con coalition, but also the coalition which is the EU and that which exists in his own party between anti-Europeans, Euro-sceptics and Euro-pragmatists.

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Thus Vince Cable unwittingly summed up the launch of what Whitehall has dubbed The Coalition's (capital "T" and capital "C") programme for government.

The business secretary was not, I should stress, making a political comment. He was instead reacting to the home secretary's offer to fill for time while he fumbled with his microphone.

However, the first coalition in 65 years is, of course, having to make things up as it goes along since there's no-one alive and active in politics or the civil service with any experience of forming a coalition in Westminster. If it weren't for the lessons learned in the Scottish Parliament and Welsh Assembly, goodness knows where we'd be.

The prime minister chided the media for churlishness when reporters pointed out that many difficult decisions - on social care, human rights and splitting up the banks - have been handed to commissions to sort out. He pointed out that The Coalition had come up with a detailed programme with very few decisions postponed in just nine days compared with the 40 or even 80 it can take for coalitions in other countries.

Coalition, David Cameron says, is "a new world... a state of mind... something we'll all have to get used to". What's intriguing is to observe who is comfortable in the new world and who is not. Vince Cable looks uncomfortable sharing a platform with the Tories while Nick Clegg can't stress enough how much agreement he's discovered between the two parties and how he hopes "to share a platform of success" with the Conservatives at an election in five years' time.

A week ago, it was the new PM who looked most starry-eyed about his new political romance. Since then, however, he's been teased by some close to him that he risks looking like the boy at school who's got a new girlfriend and can't stop boasting about it. So today he was careful to stress that he remained leader of the Conservative Party, to acknowledge that there have been policy losses as well as gains in forming a coalition, and that he was not picking a fight with anyone.

What makes The Coalition such a gripping spectacle is that they and we have no idea whether what they make up as they go along will work tomorrow - let alone next week or next year.

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Coalition involves compromises.

Everyone knows that and many voters positively welcome it.

But compromise is a dirty word to many MPs and party activists. To them it's simply a long-winded way of saying betrayal - particularly when something they believe in is ditched and something they oppose is adopted.

Thus, it is, with a growing number of Conservative and Liberal Democrat backbenchers.

Take the Human Rights Act. Before the election the Tories pledged to replace it, the Lib Dems to defend it...now the coalition promises to review it leaving few happy on either side.

On the economy few Conservatives like the idea of high tax rates for capital gains on the sale of second homes or shares - few Lib Dems cherish the idea of cutting public spending now.

Tomorrow sees the publication of a new, fuller coalition agreement spelling out more painful compromises - the Conservative idea of a free vote on fox hunting looks set to be abandoned.

Interesting then that this evening David Cameron surprised his MPs - again - by inviting them to re-write the rules of what in the past has been the powerful 1922 committee representing Tory backbenchers. He's proposing that now loyal ministers should take part too.

Update: I confess that I have just committed a terrible historical crime. On the telly I said that the 1832 Great Reform Act had extended the franchise to millions - that is, of course, a wild exaggeration. The franchise was extended by a few hundred thousands. The millions had a while longer to wait.

Incidentally, there is a raging debate about whether, in any event, Nick Clegg's chosen the wrong historical milestone since many historians regard the 1832 Act as an attempt to limit or block reform. Others respond that although it was only a small first step, it began a process of reform that could not be resisted.

Feel free to continue that argument here.

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Ambitious - but is it achievable? The rhetoric was soaring, but can the reality possibly match it?

Those were my thoughts as I watched .

A wholesale big-bang political reform and what he calls a new politics.

Much on his agenda involves this new government simply not doing things on ID cards, the DNA database, CCTV and the ContactPoint database of children.

So far, so easy.

Much can also happen through the government acting without the need for new legislation to give for example more money and power to local councils, voluntary bodies and individuals.

Although I do remember politicians like Douglas Hurd in the 1980s talking of those Edmund Burke called the "little platoons" and the need to "empower them", pretty much every government since has talked the same talk but not got quite got round to walking the walk.

On political reform though, the Clegg agenda requires not just legislation to back a referendum on voting reform but a yes vote too.

Not just for the new commission on Lords reform to find agreement missing this past century but for existing peers to vote for their own demands; and not just all party agreements on the reform of political funding but also a majority for the legislation in both houses.

Perhaps it is the area I focused on yesterday - human rights - which best illustrates the problem of delivery for this new government.

Today the deputy prime minister suggested a commission could look into reforms of the way the Human Rights Act works even thought the Conservatives have been looking at this for the past five years.

He implied in the meantime that the government could use control orders and negotiate new agreements with countries like Pakistan to ensure they didn't torture those who were deported to their shore.

This, though, is exactly what Charles Clarke promised when he was Labour's home secretary six years ago and at that time the Tories and Liberal Democrats united in condemning him.

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"We're not planning that."

So said the Cabinet Office minister Francis Maude on the ³ÉÈËÂÛ̳ News channel about the idea - a Conservative manifesto promise, you may recall - to "replace the Human Rights Act with a UK Bill of Rights".

Mr Maude was quick to say that this was not really a matter for him but his words will lead many to wonder if this will be another Tory promise to fall victim to the formation of the new coalition?

On the day the in north-west England won his appeal against deportation will it be another excuse for the Daily Mail to warn of betrayal?

The promise to repeal the Human Rights Act not only divides the Tories and the Lib Dems. It also divides the prime minister from the man he's just made justice secretary.

branded David Cameron's proposals for a British Bill of Rights "xenophobic" and "anti-foreigner".

He was reacting to a speech in which Mr Cameron said the Human Rights Act was "practically an invitation for terrorists and would-be terrorists to come to Britain" and declared that "I believe it is wrong to undermine public safety, and indeed public confidence in the concept of human rights, by allowing highly dangerous criminals and terrorists to trump the rights of the people of Britain to live in security and peace."

Perhaps the easy solution will be for the Tories to stick with the reality of their position pre-election? For months now I've been told privately that whatever their manifesto might say they've not actually found any way to carry out their promise.

I await the publication of the coalition's joint programme later this week with interest.

Update, 17:01: The issue of human rights and terror suspects is even more complex than I thought.

Even if Britain replaced the Human Rights Act with a Bill of Rights we would, I'm told, still be subject to the European Convention of Human Rights (ECHR).

Article three of the ECHR states that "No one shall be subjected to torture or to inhuman or degrading treatment or punishment" and we cannot derogate from it unless we're at war.

That's why the Conservative document "A Resilient Nation" published in February promised to "review jurisprudence relating to ECHR to permit deportation of foreign nationals".

The man who expected to be justice secretary - but is now attorney general - Dominic Grieve gave a speech condemning those who said that the answer was to withdraw from the ECHR:

"Although some have argued, and increasingly vociferously, that the solution for the UK in view of these problems is to withdraw from the Convention altogether on the grounds that it is an undesirable and unnecessary fetter of national sovereignty in decision making, I entirely disagree, as does the Conservative Party. Such a withdrawal would send a very damaging signal about how the UK viewed the place and promotion of human rights and liberties and would be an encouragement to every tin pot dictator such as Robert Mugabe, who violates them."

Pending the review the Tories promised terror suspects, like those who were the focus of today's case, will, almost certainly, be the subject of control orders.

The Liberal Democrats described them as "an affront to British justice" which should be scrapped. The new Conservative Home Secretary is about to make use of them. Her party only promised to "review" the system.

Aren't coalitions fun?

Update, 17:22: I understand that the government is about to announce the creation of a commission to look into the workings of the Human Rights Act.

An ideal way, perhaps, to paper over divisions within the government over the future of the HRA.

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Has the chancellor just told us that there will be no tax increases beyond those he's already announced - a new bank levy and an increase in capital gains tax - or decided to live with Labour's plan for a new 50p rate, higher taxes on pensions contributions and the national insurance rise for workers?

George Osborne re-iterated his commitment today to let spending cuts take around 80% of the burden of cutting the deficit and tax rises around 20%.

He then added that by agreeing to the Lib Dem proposal to increase capital gains tax he was already on course to raise "more than 20".

So, provided the new Office for Budget Responsibility does not conclude that the hole to be filled is even bigger than feared there will be no need to raise VAT or any other tax in the emergency budget of 22 June.

If the hole is bigger, though...

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Having taken a leap in the dark by forming a coalition, will David Cameron now take another by embracing political reform - to the electoral system, to the Commons and the Lords - which he once opposed?

Was the prime minister inspired by the example of that great Tory reformer Benjamin Disraeli?

Some of those advising Nick Clegg how to prepare for coalition talks with David Cameron recalled words, which I confess I had forgotten, he used in an interview with me for my Radio 4 documentary about Benjamin Disraeli [scroll to bottom of page]. Mr Cameron praised his predecessor for his sheer audacity in outmanoeuvring Gladstone on the issue of political reform - first opposing, then embracing it and going much further than either he or his opponent had planned. The issue then was extending the franchise to people who did not yet have the vote.

Mr Cameron told me that it was "a hugely bold move - somebody said he took a leap in the dark, he looked round, and then took another one".

Rather like, you might think, agreeing to form a coalition and then to embrace reform of the voting system, the Commons and the Lords.

Tories worrying that their leader may be risking the unity of their party may not be comforted by his words about another Tory reforming prime minister, Sir Robert Peel. Peel repealed the Corn Laws and split his party down the middle.

Mr Cameron told me:

"It was a classic bit of Tory modernisation... It was a huge change to take on his own party, to take on the vested interest and make the right change for the country. The tragedy was that he split the party in the process, but he did the right thing."

It is not just Mr Cameron's words which are worth another listen. Intriguingly, Nick Clegg - in an interview for the programme on David Lloyd George [scroll to bottom of page] - told me that he regarded as a mistake the great Liberal's determination to continue in peacetime the coalition which took Britain through World War 1.

Lloyd George had ended up governing without a political base, depending on the Tories for his survival and, therefore, had no protection when things went wrong.

Who says history doesn't repeat itself?

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The garden, 10 Downing Street: Not since Tony Blair's first summit with president George Bush have I attended a prime-ministerial news conference like this one. It was not so much a love-in as the exchanging of vows at a political civil partnership ceremony.

Nick and David used first-name terms; they laughed at each other's jokes; they completed each other's sentences; and of course David agreed with Nick and Nick agreed with David.

They provided us with a form of prenuptial agreement, the result of the negotiations in the past five days between the Conservatives and Liberal Democrats but no-one asked them about that because the focus was all on their new special relationship.

The question that kept coming up in my mind though, reminded as I was of the couple who got married the day after meeting in Las Vegas, was whether on the morning after the night before they would wake up and wonder how they got hooked up for five years with someone they barely knew, and if their families would ever forgive them.

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Nerve.

That is what distinguishes those politicians who shape events from those who end up shaped by them.

It was vast reserves of nerve which allowed both David Cameron and Nick Clegg to run for, and win, their parties' leadership against far more experienced opponents; which allowed them to take on their parties and challenge some of their long-held assumptions and which yesterday led them to take a huge jump into the political dark.

It was - - a far bigger call for them than Tony Blair's much hyped decision to scrap Clause Four.

In the early hours of election day I sat at the back of David Cameron's campaign bus with the Tory leader as he began a long night of campaigning. The polls and the pundits were predicting a hung Parliament but he'd been told by his campaign team that he would get a majority and appeared to believe them.

Twenty-four hours later came the early signs that that prediction was wrong. Twenty-four hours after that, despite exhaustion, disappointment and confusion about the way ahead, the Tory leader made a decision to go for broke - offering the Liberal Democrats a full-blown coalition and ignoring most in his party who were calling on him to govern as a minority. Many thought that he was just going through the motions; even his close allies, and perhaps Mr Cameron himself, thought the Lib Dems would not have the stomach to take up his offer.

In that election week I also had the chance to chat at length to Nick Clegg. Though he was a sceptic about so-called Clegg-mania and fearful of the classic pre-polling day two-party squeeze he clearly believed that the only way for him and his party was up.

When he too faced the grinding disappointment of losing not gaining seats he had the clear-headedness to focus on the opportunity which presented itself. And also to ignore the cries of betrayal of those who'd assumed that he'd not meant what he said when, prior to the election, he said that the party with most seats and/or votes would have a mandate to seek to govern.

The result of Cameron and Clegg's nerve is a deal that still has many scratching their heads or angrily denouncing them.

What they ignore is what unites them. They are both bright, confident public-school-educated young men who are surrounded by others like them.

Cameron is the first socially liberal Tory leader in a long time and Clegg the first economically liberal leader of the Lib Dems. Though there is much that divides them there is a great deal on which they agree. Both regard parts of their own party with disdain.

There is one last thing that our new prime minister and his deputy share - a desire for power.

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The youngest prime minister in nearly 200 years.

A coalition in power for the first time in 70 years.

The Conservatives ejecting a Labour government for the first time in over 30 years.

The events of Tuesday are enough to take your breath away, without the events of the previous five days since the election which nobody won.

Twenty hours ago David Cameron returned home wondering perhaps whether his dream was over, whether, at the last, Gordon Brown would outmanoeuvre him again.

Yet it is he who has now brought into being the partnership between two political parties which New Labour talked about but never delivered, he who has agreed to fixed-term parliaments and a referendum on voting reform, he who has made a man whose policies he attacked again and again in the prime ministerial debates his deputy prime minister and put four of his allies in the cabinet.

It is an arrangement which will either collapse under the pressure of competing tensions between and within the two parties or it will shape politics for a generation to come.

On the day the last youngest prime minister for nearly 200 years took office, the sun shone and optimism reigned, but, unlike Tony Blair, David Cameron took office on a cold dark night issuing a warning about hard and difficult decisions to come.

He did so in a manner, however, that suggested he is determined to shape events and not to be shaped by them.

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• A senior Lib Dem who's sympathetic to Labour who just told me the deal couldn't be done.

• News that, at last night's Liberal Democrat parliamentary meeting, not one but all four party negotiators reported back their fear that Labour was not serious about negotiations and was, instead, turning its minds to the forthcoming leadership contest.

• The fact that Vince Cable, who's so far kept his counsel, told the same meeting that though he had roots in the Labour Party he too feared that there might be only one serious offer.

• Andy Burnham apparently joining David Blunkett, John Reid, Tom Harris et al in telling his party that they should accept they have lost.

• The resumption of talks between the Tories and the Lib Dems.

• The sight of Gordon Brown's allies heading to Downing Street perhaps for one last farewell.

• The clincher for many, though, will be the sight of John Prescott calling for something he spent years fighting against - an alliance with the Liberals.

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Numbers versus instinct.

No contest, you might think.

After all, all recent Lib Dem leaders - David Steel, Paddy Ashdown, Charles Kennedy and Menzies Campbell - have all reached political maturity in opposition, if not antagonism, to the Tories

The deputy leader Vince Cable has hinted that he would have stayed in the Labour Party - he once co-wrote a pamphlet with Gordon Brown - if he hadn't moved to London where the so-called "loony Left" had taken the party over.

Many of the party's leading veterans and founders - Baroness (Shirley) Williams and Lord (Tom) McNally - were senior figures in the last Lib-Lab pact.

Since the party failed to make a northern breakthrough against Labour, more of its MPs and activists see the Conservatives as the enemy.

So, why can you not assume that Nick Clegg will march into Gordon Brown's cabinet today?

The answer is his own declared objective to form a "strong and stable" government. A Lib-Lab coalition would not have a parliamentary majority. Ah, said Paddy Ashdown this morning, but the Tories would never be able to form a blocking majority with the SNP, Plaid and the Unionists. They wouldn't need to. The thing that defeats, exhausts and depresses minority governments is rebellions on their own side, the insistent demands of their allies and the passion of their opponents to run them ragged. Ask John Major or any veteran of the Wilson or Callaghan governments and they'll tell you that.

Now, if there is enough commitment on the Labour side to make this work all those inevitable problems of a minority government could be lived with to build "a progressive alliance".

That, though, is what Lib Dems are asking themselves this morning. Do David Blunkett and John Reid speak for many Labour figures who question the legitimacy of this arrangement and would rather go into opposition and fight the Tories. How many agree with Jack Straw's private doubts about the wisdom of this coalition? Will Ed Balls be more interested in making the new politics work or in securing the leadership of the Labour Party by standing up for his party against their new bedfellows?

As one Lib Dem put it to me - Gordon Brown going was a key that unlocked the door to a deal but it unlocked another door - to a leadership contest in which some candidates will position themselves as hostile to a deal. Another senior figure confessed that if you stripped away the party labels we'd have to go with the Conservative offer as it was so much more substantial.

So, the sincerity with which Labour enters their negotiations this morning and the reaction of the wider Labour movement will determine whether by the end of today the Lib Dems follow their hearts and ignore those nagging doubts in their heads.

Update 12:03: More and more Labour MPs are saying privately that the proposed Lib/Lab deal cannot work.

To understand what this could mean in practice in the Commons, picture the following scene.

It's an hour before midnight. A group of Labour MPs is in the Strangers' Bar in the Commons. It's the latest in a long line of late-night sittings forced on them by the guerilla war run by the Tory whips' office in which they refuse to co-operate with the government. A Labour whip walks in and tells his colleagues that a vote is imminent on a vital amendment to the home secretary's cherished Bill. "You mean Clegg's daft plan?" one asks, downing his pint. "He's not one of ours, is he?" another adds sarcastically while ordering another. "My voters didn't vote for him as far as I can recall," adds a third bitterly.

The whip runs upstairs to tell his boss. The chief whip has just seen dozens of Tory MPs returning from long relaxing dinners - after all, none of them has any government responsibilities to worry about. "I thought you said they'd all gone home," he says to one of the junior whips. "Where are the Nats?" he asks another, to be told that after the chancellor refused to back the New Scotland Growth fund, Alex Salmond's boys chose to take early flights to their constituencies. "What about the Unionists?" he shouts, only to be told that Nick Clegg has offended them with his latest liberal utterance.

The home secretary's PPS is called for and is told to pass him a note warning him that sadly the government hasn't got the votes for his Bill. Nick Clegg pulls out of his pocket the dog-eared photocopy of page 120 of his mentor Paddy Ashdown's diaries. Underlined in red pen three times is one line he wished he'd paid more attention to: "A hung Parliament would not be a dream. It would be a nightmare."

PS: I'm well aware, of course, that much of what I've described could also apply to an uncomfortable Tory/Lib-Dem coalition which was resented or rejected by backbenchers of both parties. The big difference, though, is that it would not be a minority government. It would have a significant Parliamentary majority.

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Gordon Brown has made an audacious bid, not just to keep Labour in power but to reshape British politics by creating the sort of coalition not seen in Britain since the World War II.

The prime minister was told by cabinet colleagues and by senior Liberal Democrats that there was little in the way of policy to stop their two parties working together, but that he was a barrier, in part because he was seen as uncollegiate, in part because his continued presence was regarded as electorally toxic.

This solution still raises a number of problems, however, which the Conservatives and critics in the media are sure to raise:
• is it legitimate for Gordon Brown and Labour to stay in office, having lost this election?
• is it right for a new prime minister to be chosen, not by voters, but by Labour party members?
• and can such a coalition be strong and stable given that in Parliamentary terms it has the equivalent number of MPs to Harold Wilson or John Major's governments, which were hardly strong or stable?

However, the real question tonight is for Nick Clegg. Does he now stick to his chosen path and do a deal with the Conservatives to the fury of many in his party or does he switch to Labour, risking the wrath of those who will accuse him of creating a "coalition of losers"?

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Stand by for a very significant statement from Gordon Brown.

One of his allies told me that he does not wish to be an obstacle to the formation of a government that can deliver economic security and political reform. So, will he now offer to stand aside?

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We are reduced tonight to textual analysis of the Liberal Democrats' position.

Seeking clarification from the Tories while listening to representations from Labour is how .

However, the reference repeatedly made by chief negotiator David Laws which I noted was to the need for "strong" and "stable" government. There is only one Parliamentary solution that has the numbers to be both strong and stable - the Lib Dems combined with the Conservatives. The so-called progressive alliance or rainbow coalition simply does not have the numbers to be strong and has too many potentially warring parties to be stable.

So, Team Clegg still seems headed for a deal with the Tories.

However, it is equally clear that many Lib Dems loathe the idea and want Labour's offer to be looked at seriously. The danger for the party is that it appears to be playing one side off against the other, pursuing its own interests and not the country's.

These negotiations and what follows will settle the public's views of the merits of partnership politics and the prospects of a vote for a change in the voting system much more than what happens between parties behind closed doors.

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Westminster Hall: All the signs are that there is as yet still no deal between the Liberal Democrats and the Conservatives. Nick Clegg and his negotiating team have been briefing their parliamentary colleagues for almost an hour and a half already. The word I hear is that, though there has been no outright rejection, there has also been no acceptance either.

Meantime, Gordon Brown is preparing to make a statement in response to the final outcome of this meeting, which he may use to set out an alternative way forward. The case I think he will present - if he gets the chance - is a promise to help lead European efforts to stabilise the economy and moves towards fundamental political reform before standing aside for a new leader and new prime minister.

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I can reveal that the Lib Dem negotiating team met over the weekend not just with the Tories but, in secret, with a team from Labour consisting of Peter Mandelson, Ed Miliband, Ed Balls and Andrew Adonis. So far, I can get no official comment from either party about what was discussed.

Labour have not given up on the Lib Dems returning to them for a deal. However, if electoral reform is the stumbling block to any deal with the Tories, Gordon Brown is the block to any Lib/Lab deal. The solution being pushed by senior cabinet figures is for the prime minister to oversee the transition to a new coalition whilst announcing his intention,as Tony Blair did, to stand down by a specified future date. I am told that Gordon Brown would not allow himself to be a block to a deal but does want to see through both the handling of the current economic crisis and the delivery of a new political system.

Thus, it's increasingly clear that the Lib Dems face this choice:

• An arrangement with the Tories which does not deliver electoral reform but does produce a stable government committed to introducing some Lib Dem priorities. The fear many Lib Dems have is that they would be tainted by association with the Tories who could call a snap election at a moment's notice.

• A coalition with Labour with seats in cabinet, a pledge to change the voting system and a promise that Gordon brown will not be around for ever. The fear here is that they will be harmed by the allegation that they have created a "coalition of the losers" in an unstable coalition which could collapse long before it could deliver electoral reform.

Update 13:50: To add to Tory paranoia I now learn that they knew nothing about a face-to-face meeting held this morning between Gordon Brown and Nick Clegg.

David Cameron had his own meeting with the Lib Dem leader (at 11.45 lasting 45 mins) and was, I'm told, feeling pretty good about the progress of negotiations until learning that the Lib Dems appear to be pursuing two sets of negotiations at the same time.

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Three of the architects of New Labour - Gordon Brown, Peter Mandelson, Alastair Campbell - were locked in Downing Street this afternoon discussing what the prime minister should do next and how to respond to the pressures on him.

One group in the cabinet is arguing that the Tories won the election, that they could govern as a minority as Harold Wilson did and that Labour should relish going into opposition in such a strong position.

Another larger group argues that if there is a chance of forming a "progressive alliance", Labour should take it. It is clear, though, that the presence of Brown is a block to any such deal. Thus, what is being discussed is for the prime minister to announce his intention to resign after seeing through the transition to a new coalition government, managing the current economic crisis and passing the instant legislation he promised to change the voting system. Those proposing this solution argue that it allows Labour to say that the Lib Dems aren't choosing their leader while meeting their demands for a change.

All this, of course, will only matter if the Lib Dems don't do the deal with the Conservatives and there is a growing sense in Labour's high command that Clegg and Cameron will reach some sort of agreement. Therefore, Messrs Brown, Mandelson and Campbell will also have been talking about how and when Gordon Brown should resign as PM and how to manage the succession.

So, after 48 hours of private talks, the next 48 hours could see the resignation of the prime minister, the arrival of a new one and the start of a Labour leadership contest. Er, or not?

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That is the message coming from the leader of the Scottish National Party, Alex Salmond. He's calling on the Liberal Democrats to join him and Plaid Cymru and Labour in a "progressive alliance" instead of doing a deal with the Conservatives.

Mr Salmond says: "The assumption of a Tory/Liberal Democrat pact is not correct. There are alternative and more progressive options available if politicians have the will to seize the moment. The SNP and Plaid are indicating that we do."

An arrangement between Labour, the Lib Dems, the SNP and Plaid could command a majority in the House of Commons (see the figures below). The nationalist parties would, of course, extract financial and political concessions from Westminster.

The key question Liberal Democrats have to consider is how stable such an arrangement would prove to be. Legislating for a referendum on electoral reform, staging it and implementing the necessary boundary changes could take over two years. So, if PR is the main goal for many Lib Dems they'd have to be sure that "the progressive alliance" would last that long.

If it does come about it would highlight one little talked about but significant development in this election - the growing gulf between England and the rest of the UK. In England the Tories secured almost 40% of the vote and 297 seats whilst Labour got just 28% and 191 seats.

Now you might think that the nationalists would want a Tory/English government at Westminster cutting public spending, since it would increase support for independence.

However, both the SNP and Plaid are now in government facing elections next year and would prefer to be able to say to the electorate "look how we protected you from cuts/extracted money to pay for Scottish and Welsh jobs".
The DUP in Northern Ireland may well make the same calculation.

If all joined together in an anti-Tory alliance they would have a comfortable majority - with 340 votes in the Commons - although comfortable is not how the arrangement between Labour and its traditional nationalist foes might feel to them or many Conservative voters in England.

If you like the detail, here are the figures :

No party has enough seats to win votes in parliament without the support of members of other parties.

The Conservatives are the largest party with a total of 306 seats in the Commons - which would go up to 307 -- if they win the delayed election in Thirsk and Molton - until now, at least, a safe Conservative seat.

If they tried to govern alone they would, in theory, face a combined opposition of 343 MPs.
In reality it's somewhat different. Sinn Fein won 5 seats - and they don't take their seats in the House of Commons - so the opposition benches reduce to 338.

A Con/Lib Dem coalition would give them a total of 364 - enough to govern comfortably.

A looser arrangement in which the Lib Dems agreed not to vote against a Tory Budget or the Queen's Speech would mean 306 or 307 Tories facing a depleted opposition of 281 (that's 338 - 57 Lib Dems)

If a Lib Dem/Conservative deal fails, Gordon Brown will try to form a government.

If Labour and the Lib Dems joined forces - the extra 57 votes are not enough to make them the biggest force even with the support of the Northern Irish SDLP (who sat on the government benches in the last parliament) and the one new Alliance MP who is allied to the Lib Dems. Together that's 319 votes.

With the support of the nationalists from Scotland and Wales they would reach 330.

If the DUP joined too and the independent unionist and the new Green MP this alliance would have 338 votes in the Commons.

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"The electorate have invented an instrument of excruciating torture for the Liberal Democrats".

Thus a senior party figure summed up their predicament.

The maths, he went on, don't work one way - a Lib-Lab coalition could only have a working majority in alliance with all the unionists and all the nationalists. Hardly a recipe for stability.

The instincts don't work the other - few relish the prospect of getting into bed with the Conservatives who most Lib Dems grew up opposing if not loathing.

They should not complain too much. Their position proves that less can, indeed, be more. Less (OK, fewer) MPs will produce what Simon Hughes called this morning the "best opportunity in 35 years" to achieve some of their goals.

Senior Lib Dems I've spoken to believe that the Tories are sincere in their negotiations although they regard David Cameron's opening offer as little more than agreeing where possible, applying the Tory manifesto where not combined with a re-heat of Ted Heath, and later, Tony Blair's plan to look at electoral reform. They will push for more.

They will, no doubt, have heard the sabre rattling from the man who wants to be seen as the standard bearer of the Tory grass roots - Liam Fox - who declared today that his party's "collective leadership" (note those words Mr Cameron) would not be "held to ransom".

My hunch is that a Tory/Lib Dem arrangement can be formed but not a coalition which both parties would find too hard to stomach. The reason is that both parties' leaderships have a shared interest in avoiding an early second election. The Lib Dems are shell shocked by the extent to which their dreams of an electoral breakthrough were smashed and have no money for anther campaign. The Tories are surprised by Labour's electoral resilience and do not fancy getting to grips with the deficit whilst constantly looking over their shoulders at the electorate.

Oh, and one other thing. Lib Dem votes in Parliament may prove more reliable for David Cameron than restless Tory backbenchers.

1509: Liam Fox insists that he was not firing a shot across his leader's bows when he spoke of collective leadership but was, merely, comparing the speed with which the Tories could act and the slow, consultative processes of the Lib Dems.

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There is only one potential stable majority available. That is a combination of the Conservatives and the Lib Dems.

The question, therefore, is what terms will David Cameron offer and what will Nick Clegg accept. Oh, and one other thing, will their parties accept their proposals?

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An intriguing interview just now with Peter Mandelson.

He conceded that the country had voted for change and accepted that replacing Gordon Brown was one of a number of options on the morning after the night before.

He is one of a number of cabinet ministers who have been preparing the ground for a Labour/Lib Dem coalition. To turn their dream into reality, they would have to prove to the country that a coalition of two losing parties would be a more stable government than a Conservative minority government.

The ³ÉÈËÂÛ̳ projections show the shape of two possible rival power blocs:

LAB: 261
LD: 55
SDLP: 3
ALLIANCE: 1
Possible total: 320

CON: 306
DUP: 8
IND UN: 1
Possible total: 315

Non-aligned:
SNP + PC: 9
GREEN: 1

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That is the unanswered question at the end of an extraordinary, unprecedented and inconclusive night.

And it may stay unanswered at the end of today and, indeed, at the end of many days to come.

The reason is simple. Winning an election - in the sense of comprehensively beating your opponents - is not enough for the Conservatives. David Cameron has to prove that he can command a majority of votes in the House of Commons.

The Conservatives argue that Labour has been overwhelming rejected and, therefore, has no mandate to govern. However, they need either the active support or, at least, the acquiescence of other parties to govern.

What's more, Gordon Brown remains Prime Minister until he concludes that he cannot form a government and resigns. As soon as the ballot boxes began to be emptied minister after minister publicly wooed the Liberal Democrats with public pledges of electoral reform. It is clear that their only hope of survival is a coalition.

The irony is that having utterly failed to fulfil the huge expectations of an improved Lib Dem performance Nick Clegg may, after all, play the role of kingmaker in this election.

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• - What's this?

Voters locked out of polling stations, ballot papers running out, scuffles inside polling stations, sit-ins, the police called, some able to vote after 10pm while others were blocked from doing so.

What a tragedy that, after a campaign which engaged and energised many who were previously cynical about politics, tonight's story may be being over-shadowed by the extraordinary revelation that Britain cannot competently run the most basic part of the democratic process.

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Already senior Labour and Tory figures are rehearsing what could turn out to be the major argument of tonight and tomorrow over who has the right to govern if there is a hung Parliament.

Harriet Harman and Peter Mandelson have begun to try to persuade the country that what matters after tonight is the creation of "a strong and stable government".

Alan Johnson has said that "if the will of the people is that no party has an overall majority" he would have no problem with a coalition. All have started the not-very-subtle wooing of the Lib Dems.

The Conservatives' line coming from Michael Gove and Theresa May is that today's poll has been a "decisive rejection" of the Labour party and Gordon Brown, and, that on the basis of the exit poll, the Tories have benefited from the biggest swing to them in more than 80years. They too say that they will do "all they can to provide a stable and responsible government". What that means they don't say.

Meantime Ed Davey for the Liberal Democrats has confirmed Nick Clegg's pre-election night statement that the party with the most votes and seats has the right to try to form a government.

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• - What's this?

Drama. Excitement. Uncertainty.

That is what our exit poll guarantees this election night.

If it's right the Conservatives are on the cusp of power - without a majority but able on the basis of a deal or, more likely, a series of ad hoc deals to govern as a minority government.

If it's just a little wrong - and, of course, it is only a poll - then it is possible either that the Conservatives have a majority or that Gordon Brown attempts to stay in power at the head of a coalition government with the Lib Dems.

The exit poll projection that will surprise most people is for the Liberal Democrats to lose seats. If, in fact, they make gains from Labour and/or the Tories that will help determine who makes it to Number 10.

The story of this night is likely to be that no single uniform national trend predicts the outcome in every seat so you may be in for a very late night indeed.

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• - What's this?

At one o'clock this morning a night-shift worker in the WEC Engineering factory in Darwen, Lancashire told me that he was agonising about how to vote. He didn't think he would know by the time he reached the ballot box. He couldn't decide whether to back the man he'd just met and liked - David Cameron - or the man he liked on the TV - Nick Clegg. He was weighing up policy, history and emotion.

The signs are that millions of voters are agonising, weighing up in their minds the two most powerful messages in politics - time for a change and don't risk it.

In this rollercoaster ride of an election Labour are the ones feeling on the up on this final bend. They are hugely relieved that the polls suggest that they are now clearly in second, not third, place. They believe that Gordon Brown's warnings about the impact of Tory cuts and, in particular, cuts to tax credits are persuading many women voters to stick with Labour.

David Cameron's attack on what he calls Gordon Brown's lies, his attempts to reassure and his talk of fighting for the poor are proof that the Tories share this analysis. They still believe they will win the most votes and seats; some senior figures predict an outright majority. But look into the Tory leader's eyes. It's clear that a man who's seen many Tory defeats can't believe that the country wants another five years of Gordon Brown but fears that he may not have done enough to avoid it.

The one person most concerned that Cleggmania could not last was Nick Clegg himself. He believes that this election has revealed a deep desire for a change from what he calls "politics as usual" but fears the classic two-party squeeze.

All three leaders are now waiting anxiously for how people like the man I met last night make up their minds. It will determine their futures and yours.

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"You can read my lips. That is a promise from my heart."

Thus David Cameron sought tonight to reassure voters that he would "look after... the elderly, frail, poor and needy" and protect pensioners' benefits, having condemned what he says are Gordon Brown's lies.

It's an unfortunate phrase given its history. George Bush Sr was the first to say "read my lips". The rest of the sentence was "no new taxes". It helped him win the presidency in 1988. He went on to raise taxes to reduce the deficit and "read my lips" became shorthand for broken political promises.

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Today, Gordon Brown faced the following tough questions on the campaign trail in Leamington Spa:

Q1: Can you elaborate on Labour's plans?
Q2: How can you promise that the middle classes - like working people - can afford to go to university?
Q3: If elected, will you maintain the EMA (Educational Maintenance Allowance) scheme?
Q4: With your recent brush with personality politics, are you sure that you're the right man to take Labour forward and that your policies are better than the Conservatives' and the Lib Dems'?

Labour insists that 99% of the audience were ordinary students, but could not tell what percentage of the questions were from Labour activists. One questioner somewhat gave the game away, though, by confessing she'd forgotten her question.

This follows yesterday's event in Ipswich, where the questions included:

Q1: Can you tell us what you would most like to celebrate?
Q2: Why has Labour not said more about its achievements?
Q3: What can be done to build community relations?
Q4: What would you do to help people with disabilities?

My favourite of all, though, was: "Will you come back to Ipswich when you win the general election?"

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In just four days' time the Browns may be packing their things to leave Downing Street. The Camerons may be moving in.

That certainly is the growing expectation of politicians on all sides - speaking privately, of course.

All emphasise that this campaign has been more unpredictable than any they can recall; that the polls and anecdotal evidence show that many, many people have yet to make up their minds and that there is still time for things to change.

Labour HQ was relieved not to slump into third place after Gordon Brown's disastrous encounter with Mrs Duffy.

However, some ministers have told me that their hope is not that Labour will win but that they might come second in the popular vote and win enough seats to make the Liberal Democrats an offer they cannot refuse. Some mutter that the price they may have to pay is replacing Gordon Brown with a new leader.

The Conservatives expect to come first but do not know whether they can win enough seats to govern without depending on the support of other parties - which is a far cry from their confidence of a clear majority before the campaign started.

The Liberal Democrats insist that the polls show that they can still come second and are praying that as voters focus on the choice between two occupants of Downing Street that their vote is not squeezed.

All agree that we/they can't know the outcome of an election which has yet to take place.

That doesn't stop them/us having to consider an outcome which - whatever happens - will make political history.

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• - What's this?