By Tim Castle and Matt Falloon
LONDON (Reuters) - The junior party in Britain's coalition government said on Friday the two-year-old alliance was entering "uncharted territory" after reports that Prime Minister David Cameron planned to drop promised parliamentary reforms.
Newspapers said Cameron was set to abandon reforms to parliament's unelected upper chamber, the House of Lords, that have been championed by his Liberal Democrat partners after he failed to overcome opposition within his own Conservatives.
Cameron's office said talks on the Lords were still in progress and that an announcement would be made in due course.
But the reports were greeted with fury by the left-leaning Liberal Democrats, who have seen their opinion poll ratings slump after joining the center-right Conservatives in government in 2010.
The Lib Dems have staked much political capital on replacing the Lords with a largely elected chamber and now face the risk of accusations from grassroots members that they have gained little from their support for the Conservative-led government.
Lib Dem legislators have reluctantly backed many Conservative measures, including an unpopular rise in university fees, as part of a coalition deal struck between the two parties.
But the Conservatives' failure to keep their side of the bargain by supporting reform of the Lords threatens to chill already the lukewarm relations between the two sides and provoke the Lib Dems into tit-for-tat retaliation.
"Lords reform was in the coalition agreement and we expect it to be delivered as such," a senior Liberal Democrat source told Reuters on Friday.
"A deal is a deal - if that deal is not honored it takes the coalition government into uncharted territory," said the source.
Cameron and Lib Dem leader Nick Clegg have said the row over the Lords would not lead to a divorce or divert the coalition from its primary aim of restoring Britain's economy back to health after being hit by the global financial crisis.
But the Lib Dems are likely to respond by blocking changes sought by the Conservatives to the number and make-up of voting districts that were expected to favor Cameron's party in the next election, due in 2015.
That could potentially trigger what one Lib Dem legislator has said could be a "chain reaction" of disagreements between the coalition partners.