Moves by Tory leader David Cameron to extend across the country his party's coalition with the Liberal Democrats in Birmingham were rebuffed yesterday.

Mr Cameron challenged the new leader of the Liberal Democrats to join with the Conservatives in forging a "progressive alliance" against Gordon Brown and Labour.

Such an arrangement has been in place on Birmingham City Council since June 2004, when a Tory-Lib Dem coalition - dubbed the Progressive Partnership by its creators - ended Labour's 20 years in power.

But Mr Cameron's proposal was swiftly dismissed by Lib Dem acting leader Vince Cable, who said the Conservative leader appeared to be living in "cloud cuckoo land".

With the Lib Dems to announce the outcome of their leadership contest tomorrow, Mr Cameron said he believed the two parties should work together to pressurise Labour into decentralising power from Whitehall.

Mr Cameron's message appeared designed to appeal to both Nick Clegg and Chris Huhne, the two contenders for the Lib Dem succession.

The Tory leader suggested the Green Party could also be brought into the alliance which would enable them to pursue environmental objectives through the "empowerment" of individuals and communities.

"I've always believed that political parties, even though they may have serious disagreements over many aspects of policy, should work together in areas where they agree," he said in the article, to be posted on his website.

"So I hope that in 2008 the Liberal Democrats and the Green Party will join us in putting pressure on the Government to decentralise power, and that together we can create a new progressive alliance to decentralise British politics."

The call for a formal alliance was rejected by John Hemming, the Liberal Democrat MP for Birmingham Yardley and his party's shadow Minister for the West Midlands. Mr Hemming said the Lib Dems should resist forming a coalition with any party, while aiming to deliver a hung Parliament after the next election.

Electoral reform, with the introduction of proportional representation, would put paid to an "elected dictatorship" where Labour was able to form a government with less than 30 per cent support from the electorate.

He added: "The Progressive Partnership in Birmingham works well, but nationally we need to change the way we things happen. We need to knock Labour out of overall control but I don't want to put another elected dictator in place."

Mr Cable said: "A Conservative Party that wants to cut funding on public services and talks the talk on green issues but fails to deliver any meaningful policies has little to offer today's Britain."

Mr Cameron's offer follows Mr Brown's earlier attempt to woo the Lib Dems - offering Cabinet seats in his "Government of all the talents" to senior party figures such as ex-leader Lord Ashdown. The offer was flatly rejected by the then leader, Sir Menzies Campbell.

It also carries echoes of the talks that Tony Blair held with Lord Ashdown, when he was leader, before Labour's 1997 General Election landslide.