Nick Clegg has met senior Lib Dem MPs to discuss a power-sharing offer from the Tories, after the UK election resulted in a hung parliament. He stressed his priorities, including "fundamental political reform", but said they would act in a "constructive spirit" in the "coming hours and days".
The Tories won most seats but were short of a majority and are asking for Lib Dem support to form a government.
Gordon Brown and Mr Clegg spoke on the phone on Friday, the BBC has learned.
But there are conflicting reports about the conversation, with one senior Lib Dem source saying Mr Brown had ranted at Mr Clegg and another telling the BBC it had been a perfectly amicable conversation.
Lib Dem talks
Downing Street sources said the call had been the appropriate constitutional approach, lasted less than 40 minutes and concentrated on "process". Mr Brown, who remains prime minister, has publicly invited the Lib Dems to talk to Labour, if talks with the Conservatives fail.
All three party leaders are attending the VE Day ceremony in Whitehall.
The BBC understands some Labour members are already talking to their Lib Dem counterparts to try to persuade them that a deal with the Tories would be a disaster.
Mr Clegg met his frontbench MPs at 1030 BST and will meet his wider parliamentary party and his party's governing body, the federal executive, later to discuss Mr Cameron's proposals in the wake of the first general election to deliver a hung parliament since 1974.
He will need the support of a majority of MPs and the executive to enter into any deal.
The Lib Dem leader is likely to face opposition from some within his own party to doing a deal with the Conservatives - and Mr Cameron will face a battle from some Conservatives if he allows senior Lib Dems to serve in a Conservative-led cabinet or bows to demands for change the voting system.
'Stable government'
As he entered the talks Mr Clegg said the election result meant politicians had to talk to each other as "people deserve good, stable government".
He said the Lib Dems would enter into talks with other parties in a "constructive spirit" over the "coming hours and days" - implying that a deal is unlikely on Saturday.
He did not take any questions, but said the party would press its case for its four priorities - tax reform to make the system fairer, a "new approach" to education to give a "fair start" to all children and to the economy and "fundamental political reform to our political system".
Electoral reform is likely to be a key battleground - the Lib Dems have long campaigned for the first-past-the-post system to be replaced with a form of proportional representation. The Conservatives oppose changing the voting system.
'No small victory'
Labour minister Ben Bradshaw told the BBC it was "not credible" that the Lib Dems would do a deal with the Conservatives without the promise of electoral reform.
He said Gordon Brown could remain prime minister in a "progressive" coalition deal with the Liberal Democrats, if their talks with the Tories failed.
He added: "I think the fact that we have deprived the Conservatives of a majority is no small victory for Gordon Brown."
Mr Cameron offered an "all party committee of inquiry on political and electoral reform" but has not offered a referendum on changing the voting system - something Mr Brown has pledged if Labour remain in power.
Senior Conservative Liam Fox told the BBC: "It would seem to me very strange in an election that was dominated by the economy...if the government of the UK was held to ransom over an issue that the voters did not see as their priority."
He admitted politicians were "constrained" by the range of views within the party but said the question was whether the parties would focus on their similarities to provide a "stable government for the country" or whether "elements within the parties" would be allowed to focus on their differences.
He said that was not "a free-for-all for politicians cobbling deals after the election".
The Tories secured 306 of the 649 constituencies contested on 6 May. It leaves the party just short of the 326 MPs needed for an outright majority, with the Thirsk and Malton seat - where the election was postponed after the death of a candidate - still to vote.
Labour finished with 258 MPs, down 91, the Lib Dems 57, down five, and other parties 28. The Conservatives got 36.1% of votes (up 3.8%), Labour 29.1% (down 6.2%) and the Lib Dems 23% (up 1%).
Past practice under Britain's unwritten constitution involves the sitting prime minister in a hung Parliament having the right to make the first attempt at forming a ruling coalition.
But Mr Clegg - whose party did worse than in 2005 despite favourable opinion polls - said that he believed the Tories had gained the "first right" to attempt to form a government.
