Lib Dems and Tories make 'further progress' in hung parliament talks

High ranking Lib Dem Chris Huhne was holed up in top-level talks with leader and kingmaker Nick Clegg.

However, no deal has yet been reached on a Tory and Lib Dem power share.

Spokesman David Laws said: "The very clear signal sent out today by our parliamentary party is that they believe that it is vital that we must have stable and strong government for this country so that the government of this country is able to tackle the economic problems that we have got, to bring down the deficit and to tackle political problems - and that is central in any agreement that is made."

Gordon Brown is due to make a statement at 5pm.

If an agreement is made sources suggest the Eastleigh MP could be in the frame for the post of Transport Minister or Home Secretary.

Mr Huhne, Lib Dem home affairs spokesman and twice contender in party leadership race, romped to victory in the general election stretching his majority from 534 to 3,864.

When asked if he expected Mr Cameron to be Prime Minister tomorrow, the party leader's Commons aide, Desmond Swayne, said: ''I hope so.''

Rumours are circulating that an "outline" of an agreement may be in place.

Earlier today, shadow foreign secretary William Hague, speaking after 90 minutes of negotiations at the Cabinet Office in Whitehall, told reporters: ''We have made further progress in our meeting with the Liberal Democrats this morning.

''We are now going to report back to David Cameron again, and have meetings with our parliamentary colleagues.

''The negotiating team are working really well together.''

Mr Hague, with shadow chancellor George Osborne and party policy chief Oliver Letwin then crossed the road to Parliament, where a growing number of MPs of all parties were gathering.

The Lib Dems also said good progress had been made at today's talks.

Earlier, leader Nick Clegg, speaking outside his London home, said: ''I don't think a prolonged period of uncertainty is a good thing. That's why we want to arrive at a decision as soon as possible.

''But I hope people equally understand that it would be better to get the decision right rather than rushing into something which won't stand the test of time.''

He added: ''Throughout this process, we continue to be guided by our ambitions and objectives of bringing stability to the British economy and introducing the big changes of tax reform, in our schools system, the way our economy is run and the way our political system is organised.''

The Liberal Democrat leader said his team was working ''flat out around the clock''.

Last night, David Cameron held his second face-to-face talks with Mr Clegg in the space of 24 hours as the Tory leader appeared to be inching closer to Number 10.

That meeting followed a marathon session, lasting more than six and a half hours, between the Tory and Lib Dem negotiators yesterday.

This morning they were discussing ''specific proposals'', according to the parties.

As he left home this morning, Mr Cameron remained upbeat, telling reporters: ''I am always positive.''

He is to gather his Shadow Cabinet for a meeting at about 4pm before addressing the party's MPs in a potentially tricky meeting at 6pm.

Mr Cameron and Mr Clegg also had a 30-minute phone conversation today to discuss progress in the talks between their parties.

A senior Lib Dem source said: ''The conversation was positive and constructive.''

Mr Clegg is to meet his MPs - including Eastleigh MP Chris Huhne - at 1pm, followed by talks with his party's federal executive at 5pm. Both bodies have to agree any deal under Lib Dem rules.

Prime Minister Gordon Brown, who is facing an increasing clamour from his own MPs to step down, was joined by some of his most senior lieutenants this morning.

Business Secretary Lord Mandelson, Schools Secretary Ed Balls and deputy Labour leader Harriet Harman slipped into Number 10 shortly after 9.20am.

It appeared last night that Mr Brown had not given up his slender hopes of retaining Labour's grip on power after it emerged he had held a secret meeting with Mr Clegg.

Both sides were playing down the significance of their discussion, at the Foreign Office, describing them as ''amicable'' but stressing that the two men were simply updating each other on the latest situation.

Chancellor Alistair Darling said the Tories and Lib Dems should decide today whether they could cut a deal.

He told the BBC Radio 4 Today programme: ''For my part, I don't think it will do any good to let this process drag on.

''I understand that the Liberals and the Conservatives are engaged in talks today. I hope that by the end of today they will decide whether they can do a deal or not.

''We have made it clear that if they can't then, of course, we are ready to listen to the Liberals.''

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