Recriminations broke out yesterday after plans for a “rainbow” coalition to run Wales collapsed at the last minute because of divisions among the Liberal Democrats.

The Welsh Nationalists and Conservatives rounded on the party they had agreed to make partners in a groundbreaking coalition, accusing the Lib Dems of being unworthy of power. Labour, which had given up hope of continuing its minority rule after losing four seats in the Assembly election, was suddenly presented with a chance of staying in office.

The party moved to take advantage of their opponents’ disarray, requesting the process to nominate a First Minister be brought forward to today. Barring further surprises, Rhodri Morgan looked set to return as First Minister. Plaid Cymru said that there was too little time to consider alternatives and its Assembly group agreed to abstain in the vote.

Were no First Minister to be nominated by Wednesday, Wales would, by law, have to hold another election. The one thing upon which the nation’s squabbling politicians agree is that that would be a disaster.

Labour’s return to power could be shortlived: with 26 seats in the 60-member Assembly it will have to navigate its programme, and future budgets, on a vote-by-vote basis.

Once the dust settles, Labour may reopen talks with the 15 Welsh Nationalists on a voting pact short of a coalition. But there is bad blood after Plaid’s audacious – failed – move to slam the door on negotiations with Mr Morgan in favour of a coalition with his rivals.

Nationalists have also been upset by Mr Morgan’s jokes: after the election he described the prospect of talking to the Lib Dems or Plaid as facing a choice between “the unpalatable and the inedible”.

The turmoil among the Welsh Liberal Democrats dwarfs such tensions. One Assembly member, Peter Black, talked openly of a challenge to Mike German, his group leader, who led the coalition talks.

The Welsh Lib Dems first cancelled a special conference scheduled for tomorrow to approve the coalition policy agreed with Plaid and the Tories. Later they announced that it would go ahead following a request from some members.

Although it will be too late to revive the proposed three-party coalition it may indicate whether grassroots Lib Dems would countenance such a move in a year or two were a minority Labour administration to fall.

The coalition policy blueprint, containing Lib Dem aims such as a referendum on a new voting system for councils and on full legislative powers for the Assembly, was narrowly approved by the party’s negotiating team and Assembly group. But a vote by its executive was tied. Party rules required a majority in all three groups. The six Lib Dems voted not to reopen talks with Labour but to remain in opposition.

Ieuan Wyn Jones, Plaid’s Assembly leader, who would have led the coalition, said: “The Liberal Democrats have now shown that they are unable to take serious decisions, and are undeserving of government.”

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