Britain's Liberal Democrats slumped in local elections and were set to lose a referendum on electoral reform on Friday after voters punished the junior coalition party for its role in a deficit-cutting government.   

Votes were being counted after regional and council polls held on Thursday, but early results showed support for the centre-left Lib Dems had plunged. Backing for the Conservatives, the largest coalition party, held up well.

In Scotland, the Scottish National Party (SNP) made big gains in elections to a devolved assembly, which could pave the way for a future referendum on Scottish independence to end a 300-year union with England.

Treasury minister and senior Liberal Democrat Danny Alexander said the British coalition, formed a year ago, would see through its austerity programme.

"Parties in government, in the mid-term, especially when you are having to make very difficult decisions, do suffer in local elections," Alexander told Sky News.

"That is disappointing but it means we just have to redouble our efforts to deliver on the plan that we have set out."

The government has embarked on a programme of swingeing public spending cuts to rein in a record budget deficit.

A poor showing for the Lib Dems has raised the prospect that the coalition could split and derail the austerity programme, although most analysts still expect the coalition to soldier on.

Lib Dem popularity has plummeted since they formed a coalition with the centre-right Conservatives last year and created Britain's first coalition since World War Two.

This may spur challenges to party leader Nick Clegg, but senior Lib Dem Energy Secretary Chris Huhne told the BBC now was not the time to look for a new leader.

Ill-tempered spats between the Lib Dems and Conservatives in the run-up to Thursday's votes could make the work of cabinet more difficult but few expect either partner to force a split and risk propelling the opposition Labour party into government.   

"The problem is the combination of a painless night for the Conservatives with an extremely painful one for their coalition partners," said Philip Cowley, Professor of Parliamentary Government at the University of Nottingham.

"But there's no prospect of it ending soon. The Conservative leadership know that they'd not win an election outright on their own," he added.

Britons were also expected to reject a proposal to change the country's voting system in a referendum that was the main prize secured by the Lib Dems when they entered government after decades in the political wilderness.

In the first nationwide referendum for more than 30 years, Britons were asked whether they wanted to replace the first-past-the-post method of electing national politicians with an "alternative vote" system in which they could rank candidates in order of preference.

In Scotland, the BBC predicted 65 seats for the SNP in a 129 member parliament, a one seat majority that would allow it to push through plans for a referendum on Scottish independence.

Party leader Alex Salmond has said he would delay such a move until later in a new five year term. - Reuters