The Lib-Dems would hold the balance of power if either Labour or the Conservatives fail to secure an overall majority in the election that has to be held by early June.

The prospect of a "hung parliament," with no single dominant political force, has worried some investors who think it could lead to a weak administration that will shy away from taking the tough measures needed to cut the record deficit, and could force another election within months.

Uncertainty about the election outcome helped push sterling to a 10-month low against the dollar on Monday.

"I think people are entitled to expect a sensible, stable government at a time when the country is facing very, very acute choices," Lib-Dem leader Nick Clegg said in an interview with the Financial Times.

The latest opinion poll in the Sun newspaper gave the Conservative Party a 5-point lead, suggesting Labour would be the largest party, with no overall majority, under Britain's first-past-the-post electoral system.

Clegg told the FT: "We take what the markets are worrying about immensely seriously.

"We will not take any risk with UK plc, with Britain's creditworthiness or the sustainability of the public finances.

"It would be highly self-indulgent of any party to wilfully overturn the apple cart within days or within weeks of the people having voted.

"I think stability is so important that people are entitled to expect that they are not going to be constantly asked to go back on a dreary Thursday afternoon to vote again and again and again."

Labour has said it will halve the deficit over four years but has ruled out immediate spending cuts because it fears they could kill off a fragile recovery. The Conservatives, out of power since 1997, say they would cut faster and harder.

Conservative shadow business secretary Ken Clarke, a former chancellor, said at a Reuters Newsmaker event on Tuesday that a Labour victory would tip sterling into a "downward spiral" and push the cost of borrowing higher.

Clarke said Britain's fiscal situation had much in common with that in Greece, which may need a European Union bail-out after markets became increasingly unwilling to fund its budget deficit.

Clegg said the party with the biggest mandate had the right to seek to try to govern.

He reiterated the four concessions he would want for any support, as outlined at a Reuters Newsmaker in February, including political reform, more school spending for deprived children, less reliance on financial services and tax reform.

(Writing by Avril Ormsby; Editing by Janet Lawrence)