Double act not ruled out for next election

In a joint pre-Christmas press conference with Deputy Prime Minister Nick Clegg he said the "likelihood" was the two parties would contest the next election as separate parties. But – in comments that will send a chill down those in his party who are already uneasy at the concessions offered to the Lib Dems as part of the coalition – Mr Cameron would say only that he "fully expects" to fight the election as two parties.

"Of course there are some in my party and Nick's party who are less than enthusiastic about the coalition, but generally what I've found in the Conservative party is people who recognise the main thrust of what this coalition is about is putting aside party interests and acting in the national interest," he said.

The two men also accepted there would be tough times ahead as austerity measures such as the VAT rise and public spending cuts come into effect next year, but insisted tough medicine now was the only way to secure a bright future for the country.

"There will be difficult months ahead but I'm clear we're on the right track with the country in a far stronger position to deal with the economic risks than we were at this time last year," said Mr Cameron.

The Prime Minister said some people would face "difficulties" but he was confident the Government's decision to tackle the large budget deficit was "the right strategy".

Speaking about the coalition's record over the past seven months, Mr Cameron said: "Of course, it hasn't always been plain sailing. We don't agree on everything. We never said we would. And yes, the political risks are greater when you are in coalition.

"But I believe the rewards for our country of having a strong and stable Government - two parties working together in the national interest – are infinitely greater too.I believe this coalition is working well. It is working for Britain.

"And I think we can build on that success in the months and years ahead."

Mr Clegg said critics were wrong to say the Government was solely about cuts, saying there was also a "far-reaching programme" of social change.