David Cameron and Nick Clegg face the wrath of Westcountry activists if they enter a formal coalition, senior figures in both parties warned last night.

One Liberal Democrat in the region said a deal with the Conservatives would be a "travesty" after the two parties clashed angrily in key marginals during the election campaign.

As negotiators from both sides emerged from the latest talks without agreeing a deal, MPs, candidates and campaigners told of their dismay at the prospect of sharing power with their arch enemies.

Labour activists in the region claim they have been contacted by disgruntled Lib Dems who are threatening to defect if Nick Clegg enters into a deal with David Cameron that does not include electoral reform.

"There will be mass insurrection among the Liberal Democrat grassroots," said one senior source.

Tory MP Hugo Swire said the Lib Dems had been "completely useless" when running Westcountry councils but must "grow up" and back the Tories.

In response, Lib Dem Karen Gillard, defeated in the South East Cornwall seat, said: "Lib Dems I have spoken to don't want to get into bed with Conservatives but it is absolutely correct that the Lib Dems do what is in the national interest."

She said she would be "content" if the Lib Dems allowed the Tories to form a minority government with Mr Cameron as PM but voted on legislation on a "case by case basis".

For Lib Dems in particular, securing a promise of a fairer voting system remains a "dealbreaker" in any power-sharing talks.

Former Lib Dem leader Paddy Ashdown, who fronted the party's campaign in the Westcountry, said Mr Cameron's offer of a committee of inquiry into the electoral system would not satisfy Lib Dem demands for reform.

"I don't believe that anybody can now establish a new government who is deaf to the calls from the British people for reform to our political system and part of that is electoral reform," he told BBC1's The Andrew Marr Show.

Of 24 seats contested in the Westcountry last week, all but four were straight fights between the Tories and Lib Dems. The Conservatives failed to win six target seats in Cornwall, Devon, Somerset and Dorset – denied by the Lib Dems in some cases by just a few hundred votes.

One senior Lib Dem frontbencher said: "Not many Lib Dems joined the Lib Dems to help the Tories, but every party lost so we are where we are. There are probably quite a lot of Tories who are not thrilled by the prospect of working with Liberal Democrats.

"Five more years of Gordon Brown isn't what the public voted for. Labour deserved to lose but the Tories didn't deserve to win."

Others are suspicious about the Tory commitment to electoral reform. A Devon Lib Dem source said: "This is what we have been waiting for, for 80 years. The economic crisis is huge but will continue for a few years. Constitutional reform would last 100 years. I am left with the slight sense the Tories are just leading us a dance and don't really want a deal at all."

Former Lib Dem MP Julia Goldsworthy, defeated by the Tories in the Camborne and Redruth by just 66 seats, said: "I believe in what the Liberal Democrats stand for, not the other two parties."

Former Labour foreign secretary Lord Owen, Plymouth's longest serving MP, said it was "perfectly sensible" for the Conservatives, having gained the most votes and seats, "to have the first chance".

If the Tories and Lib Dems "reach agreement they could speak for 59 per cent of the electorate", he told BBC Radio 5Live.

"That would be a great help when taking the very unpopular and difficult measures that any government is going to have to make over the next few years."

He said it was "high time that we have a referendum on reform of the voting system" but it could not be a deal breaker because the Lib Dems had failed to increase their number of MPs.

But Westcountry Tories were reluctant to cosy up to Lib Dems in the region.

Mr Swire, Tory MP for East Devon and a former member of the Mr Cameron's shadow cabinet, ridiculed the idea that the Lib Dems are "the new, fresh party", saying they had been a "disaster" when running Westcountry councils.

"The reason we kicked them out of overall control in Cornwall, the reason we kicked them out of Devon County Council and Somerset County Council… is we know how completely useless they are when they are in power.

"I don't think any of us is looking forward to any kind of formal alliance with them with any relish."

He conceded that with the Tories failing to win an overall majority, such animosity may need to be "put to one side".

One option understood to be being considered is a "confidence and supply" deal, under which the Lib Dems would undertake not to bring down a minority Conservative administration in return for assurances on certain policy areas.

"Given how flaky the Liberals are, how long that will last, who knows," Mr Swire added.

"It is the worst possible time for the country to be government-less. We must put together a government and quickly and that will require the Lib Dems for once to be grown up in life and back us."

Richard Drax, newly-elected Tory MP in South Dorset, said that offering the Lib Dems proportional representation would be "a step too far", adding: "I do not believe this country would benefit from such a voting system because of the nature and history of this country. We are not German."

However, Labour cabinet minister Ben Bradshaw said: "I still find it hard to believe that the Lib Dems would agree to a deal with the Conservatives without a referendum on electoral reform and if they fail to reach a deal with the Conservatives then our door is always open.

"We support a fair voting system. It was in our manifesto. There is an alternative to a Con-Lib collation, in a progressive alliance of Lib Dems, Labour, possibly the moderate Northern Ireland parties, that could deliver that historic political reform and manage the country and the economy stably for the next two or three years."