Liberal Democrat leader Nick Clegg yesterday said he would fight for "fundamental" reform of Britain's electoral system in talks with other parties on the shape of the future UK government, following Thursday's inconclusive general election.

Clegg was yesterday meeting his party's MPs and peers to discuss overtures from both the Tories and Labour which could lead to the Lib Dems entering government as part of a coalition or agreeing to prop up a minority regime.

Negotiations between the parties were sparked by an election which delivered the UK's first hung parliament since 1974. Clegg said he would approach discussions with the other parties in a "constructive spirit". But he said that the Lib Dems would be "very much making the case for the four big priorities" identified in its manifesto: fairer taxes, help for disadvantaged schoolchildren, a green economy and "fundamental political reform".

Shadow defence secretary Liam Fox warned Clegg not to make the Lib Dems' long-time demand for the replacement of the first-past-the-post voting system in Westminster elections a stumbling block to the creation of a stable government to guide Britain through the economic crisis, when it was not a priority for voters. His party, the Tories, had won the right to see "the larger part of our manifesto" implemented after winning more seats and votes than any other party, in a campaign in which the party opposed proportional representation, said Fox. "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 told BBC Radio 4's Today programme. "I don't think that it's reasonable, given the result of the election, where we did come clearly ahead of any other party, that an agenda would be applied that was very much against what a very large proportion voted for."

Initial talks took place between Tory and Lib Dem negotiating teams on Friday night, after David Cameron put forward a "big, open and comprehensive" offer to work together, which aides made clear could include seats for the third party at the cabinet table.

Liberal Democrat party rules require Clegg to secure the approval of MPs and the executive before taking any step which could impact on the party's political independence.

Many Liberal Democrat MPs and members are thought to be wary of entering any arrangement with Tories when the parties have such stark differences over issues like the economy, Europe, immigration and defence.