A Coalition rift was growing last night after the Conservatives distanced themselves from reform of the House of Lords and suggested that any shake-up of the second chamber could be put to a referendum.
The Queen's Speech on Wednesday, in which the Government sets out its programme for the next parliamentary year, will include a commitment to create an elected senate to replace the Lords.
But George Osborne, the Chancellor, played down the importance the Coalition would give to the contentious proposals, arguing that ministers would focus on “the things that really matter”.
Last night, the Liberal Democrats insisted the Coalition's commitment to the policy remained and poured cold water on the suggestion of a national referendum on Lords reform.
Following the Tories' drubbing in last week's local elections, the party leadership suffered furious protests from backbenchers that it had become sidetracked on such issues as Lords reform and gay marriage.
Mr Osborne acknowledged yesterday that voters wanted the Government to concentrate on the economy, education and welfare and not “get distracted by too many other issues”. He told BBC1's Andrew Marr Show: “We've got to stay focused on what really matters and I think the issues that matter are actually not House of Lords reform, not gay marriage.”
His comments on the Lords implied he would be prepared to allow the reform plans to run into the sand rather than devote weeks of parliamentary time to them.
Separately, Conservative sources indicated they were moving towards a position where they would support Lords reform being put to a nationwide vote.
Either move would infuriate their Liberal Democrat coalition partners, who are convinced of the constitutional importance of creating an elected second chamber.
A senior party source said: “The Government remains committed to legislating for democratic elections to the second chamber 100 years after we first started talking about it.”
Lib Dem sources, however, were relaxed about the Chancellor's comments on gay marriage. They pointed out that the plans were being consulted upon and there had never been a plan to include them in the Queen's Speech.
The legislative programme is expected to put crime, tackling employment legislation, family-friendly measures and reform of the high-street banks at its heart.