The two are to looking to pool their 26 councillors, the minimum needed for a majority administration after the Tories lost seats at an election this month.
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Yesterday council and Tory group leader Councillor Ken Meeson said the agreement was a ‘grubby little deal’ and pledged to operate a ‘vigorous’ opposition.
The plan – unprecedented in recent times - will need to be approved at a vote at the council on Tuesday night.
Lib Dem leader Cllr Ian Hedley, whose party has 18 seats, said: “I think it will end up with an alliance with Labour but it does depend on Tuesday evening’s meeting.”
Asked if Labour and the Lib Dems had reach a agreement he said: “We have.” A coalition was ‘likely’ he said.
But Cllr Heldey said: “As far as I am concerned, nothing is done and dusted until we have the vote.”
He declined to comment on possible coalition policy until it was approved.
The party gained one seat and Labour gained two while the Tories lost two at the May 6 poll.
Labour leader Cllr Mick Corser, said: “We won seats, the Liberal Democrats won seats and the Tories didn’t.
“If you take the two percentages, we had more votes than the Conservatives so it seems to make sense to me to have talks.”
He said: “Whether it is called a coalition, I don’t know, certainly to work together as a majority administration.”
Yet Tory Cllr Meeson said: “The Liberal Democrat party nationally have done the honourable thing and entered into an agreement with the Conservatives to form a Liberal-Conservative alliance and that is what we offered the Lib Dems.
“They have rejected that. It’s a pretty grubby little deal.”
He said: “It flies in the face of the national agreement between the Conservative Party and the Liberal party to co-operate in the national interest.”
This would have been a ‘strong administration’ of 41 out of 51 councillors, he said.
Cllr Meeson said of Labour’s influence on the new administration: “It is going to be a case of the tail wagging the dog.”
Though the Lib Dems supported the Conservatives’ last council budget, this could be in doubt if Labour opposed Tory spending plans, he added.
The Conservatives got 44,409 votes to the Lib Dems’ 32,997 and Labour’s 13,953 at the poll. This gives the coalition a combined 2,541 majority.
Records dating back to 1978 show the council has been run either by the Conservatives or a ‘no overall control’ administration without a majority.
It is the second blow for the Tories after the party failed to retake the Solihull Parliamentary constituency from Lib Dem MP Lorely Burt, who ousted the party in a shock 2005 win.
Conservative Meriden MP Caroline Spelman, however, comfortably kept her seat.
‘Independent Liberal Democrat’ Howard Allen has pledged his support to a Lib-Lab coalition. There is one Green Party and one independent on the council.
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