Nick Clegg
Nick Clegg wants fairer economyReuters

Deputy Prime Minister Nick Clegg has widened his party's rift with the Tories amid mounting speculation that a second coalition government between the two would be impossible.

As the two halves of the coalition continue their differentiation strategy in the run-up to the UK's next general election, the LibDem leader pinpointed a series of Conservative policies, from welfare cuts to the EU, he could never accept.

He was particularly scathing about a "Chinese-style family policy" of limiting child benefit to only two children in a family, being promoted by work and pensions secretary Iain Duncan Smith.

He also appeared to soften his line towards Labour's shadow chancellor Ed Balls, despite previous suggestions he deeply disliked him, after Balls heaped praise on him during a recent interview.

But he also warned that the biggest threat to the economy would be a single-party government.

The latest remarks are clearly part of a planned process for the LibDems to distance themselves from key aspects of Tory policy as they begin writing their 2015 election manifestos.

But with the list of policies Clegg opposes apparently growing by the day, it is increasingly difficult to imagine any agenda the two could agree or what policies Clegg would be prepared to abandon in the event of another hung parliament after next year's election.

Clegg insisted he was still fully supportive of Prime Minister David Cameron's economic policies and that voters did not trust Labour with their money "because they messed up in such spectacular fashion in the past".

He is already signed up to Chancellor George Osborne's economic strategy, which runs well beyond the next election, but the differences over the social aspects and the targeting of welfare and tax cuts continue to grow.

Describing the cuts as "wholly unfair", he said ministers could not claim "we are all in it together" if the very wealthy were excluded from making a greater contribution. He also repeated his demand for the withdrawal of benefits such as the winter fuel allowance from wealthier pensioners which, so far, has been resisted by Cameron.

Ed Balls
Labour's Ed BallsReuters

On Duncan Smith's support for a two-child-only restriction on benefits he said: "I'm not in favour of penalising the young, I'm not in favour of a sort of Chinese-style family policy saying that the state says, 'Well, it's OK to have two children, it's not OK to have three children'."

He also repeated his strong opposition to Tory policies on the EU including suggestions parliament should be able to reject any EU rules it did not like, claiming the party was "flirting with exit" from Europe, which would be "economic suicide".

Shadow Chancellor Ed Balls recently heaped warm praise on Clegg, claiming he did not doubt his integrity, prompting talk of a thaw in their relationship and easing any possible post-election deal between their two parties.

Clegg laughed off the remarks, but added his previous comment that he did not trade personal insults but would "make an exception" for Balls was light-hearted, adding: "I genuinely try not to personalise things...and I will not with Ed Balls or anybody else".

Clegg is currently attempting to manoeuvre his party into a position where, in the event of another hung parliament, he will be in a powerful position to forge a coalition with either of the two big parties.

But with such major and growing differences of policy with the Tories and the clear thawing of relations with Labour it is possible Clegg will find it difficult to maintain the "equidistance" he once sought to achieve.