Good plan. The second chamber could be elected on the current model.

David Cameron is UK's new prime minister


Conservative leader David Cameron has become the new prime minister after the resignation of Gordon Brown.

Lib Dem leader Nick Clegg will be his deputy prime minister in the UK's first coalition government in 70 years.

Mr Cameron, who at 43 is the youngest PM in nearly 200 years, vowed to set aside party differences and govern "in the national interest".

His party won the most seats in the general election last week, but not an overall Commons majority.

The Lib Dem parliamentary party and its federal executive endorsed the coalition agreement by the required three-quarters majority at a meeting that broke up just after midnight/

Downing Street had said earlier that the Queen had approved Mr Clegg's appointment.

Lib Dem Treasury Spokesman Vince Cable has been given responsibility for "business and banks" but it is not known if his title will be chief secretary to the Treasury, a senior Lib Dem source has told the BBC.

Meanwhile, details are emerging from Conservative sources about the new government's programme, including:

* Plans for five-year, fixed-term parliaments
* The Lib Dems have agreed to drop plans for a "mansion tax", while the Conservatives have ditched their pledge to raise the inheritance tax threshold to £1m
* The new administration will scrap Labour's planned rise in National Insurance but some of the benefits will go on reducing income tax thresholds for lower earners
* A pledge to have a referendum on any further transfer of powers to the EU and a commitment from the Lib Dems not to adopt the euro for the lifetime of the next Parliament
* The Lib Dems have also agreed to Tory proposals for a cap on non-EU migration
* Conservatives will recognise marriage in tax system - Lib Dems will abstain in Commons vote
* Lib Dems will drop opposition to replacement for Britain's Trident nuclear missiles but programme will be scrutinised for value for money
* There will be a "significant acceleration" of efforts to reduce the deficit - including £6bn of spending reductions this year
* Referendum on moving to Alternative Vote system and enhanced "pupil premium" for deprived children as Lib Dems demanded

Mr Cameron has begun the work of appointing his first cabinet, with George Osborne confirmed as chancellor, William Hague as foreign secretary and Liam Fox as defence secretary.

Mr Clegg's chief of staff, Danny Alexander, who was part of the party's negotiating team, is to be Scottish Secretary, the BBC understands.

A Downing Street spokesman said it had been agreed that five cabinet posts would be filled by Liberal Democrats, including the appointment of Mr Clegg, although there are expected to be about 20 Lib Dems in government jobs in total.

Mr Cameron's arrival in Downing Street marks the end of 13 years of Labour rule.

The coalition is also the first Liberal Democrat and Conservative power-sharing deal at Westminster in history.

Mr Cameron, six months younger than Tony Blair when he entered Downing Street in 1997, is the youngest prime minister since 1812 and the first Old Etonian to hold the office since the early 1960s.

Barack Obama was the first foreign leader to congratulate Mr Cameron in a brief telephone call during which the US president invited the new prime minister to visit Washington in the summer, Downing Street said. Mr Obama was also due to speak to Gordon Brown.

German Chancellor Angela Merkel has offered her congratulations and invited Mr Cameron to visit Berlin.

In a speech outside his new Downing Street home, after travelling to Buckingham Palace to formally accept the Queen's request to form the next government, Mr Cameron paid tribute to outgoing Prime Minister Gordon Brown for his long years of public service.

He also pledged to tackle Britain's "pressing problems" - the deficit, social problems and to "rebuild trust in our political system".

Instead he stressed there would be "difficult decisions" but said he wanted to take people through them to reach "better times ahead".

He said he aimed to "help build a more responsible society here in Britain... Those who can should and those who can't, we will always help. I want to make sure that my government always looks after the elderly, the frail, the poorest in our country.

"We must take everyone through with us on some of the difficult decisions we have ahead.

"I came into politics because I love this country, I think its best days still lie ahead and I believe deeply in public service.

"I think the service our country needs right now is to face up to our big challenges, to confront our problems, take difficult decisions, lead people through those decisions, so that together we can reach better times ahead."

Emotional statement

The Conservatives have been in days of negotiations with the Lib Dems - who also negotiated with Labour - after last Thursday's UK election resulted in a hung parliament.

Earlier the Lib Dems said talks with Labour had failed because "the Labour Party never took seriously the prospects of forming a progressive, reforming government".

A spokesman said key members of the Labour team "gave every impression of wanting the process to fail" and the party had made "no attempt at all" to agree a common approach on issues like schools funding and tax reform.

"Certain key Labour cabinet ministers were determined to undermine any agreement by holding out on policy issues and suggesting that Labour would not deliver on proportional representation and might not marshal the votes to secure even the most modest form of electoral reform," he said.

However, Labour's Lord Mandelson told the BBC they had been "up for" a deal, but the Lib Dems had "created so many barriers and obstacles that perhaps they thought their interests lay on the Tory side, on the Conservative side, rather than the progressive side".

Gordon Brown: "Thank you and goodbye"

After it became clear the talks had failed, Mr Brown tendered his resignation and said he wished the next prime minister well.

In an emotional resignation statement in Downing Street, Mr Brown thanked his staff, his wife Sarah and their children, who joined the couple as they left for Buckingham Palace.

Mr Brown said it had been "a privilege to serve" adding: "I loved the job not for its prestige, its titles and its ceremony - which I do not love at all. No, I loved the job for its potential to make this country I love fairer, more tolerant, more green, more democratic, more prosperous and more just - truly a greater Britain."

He also paid tribute to the courage of the armed forces, adding: "I will never forget all those who have died in honour and whose families today live in grief."

Later he thanked Labour activists and MPs for all their efforts and told them Labour's general election performance was "my fault, and my fault alone".

The Lib Dem and Conservative teams met for hours of negotiations at the Cabinet Office on Tuesday.

The talks resumed after Lib Dem negotiators had met a Labour team, which followed Mr Brown's announcement on Monday that he would step down as Labour leader by September.

But there were signs throughout the afternoon that Labour and the Lib Dems - who together would still not command an overall majority in the House of Commons - would not reach a deal.

The truth is plain, and it is provable. David Cameron's policies will take money from the hard-working majority of Brits, and hand it to his friends and relatives on landed estates and in tax havens. He is not on your side; he is on the side of a tiny clique who have every luxury in life and now bray for even more.

And so it begins again... the insidious shovelling of wealth up the class system until the proletariat eventually rebel. Last time it ended with the poll tax. I wonder how much sh!t we'll take this time.

Now I'd have gone for something like 7 year terms per member of the second chamber, the number of seats distrubuted amongst parties based on a ballot. I like the idea of a third being elected each time, so every 2 or 3 years we'd have a vote to decide the make up of a third of the seats. Parties then allocate off of a list, or whatever means they so desire, the number of members they've been allocated by the election.

I think we're going to have to take a "wait and see" attitude on that one. Any Tory drive in that direction is going to be substantially tempered by the Lib Dems, and given the increase in the lower tax bracket that's been agreed, I think this has the potential to work out well. As I said, we need to wait and see really, it would be a bit presumtious to go marching through the streets within 24hrs of him taking office

I think we're going to have to take a "wait and see" attitude on that one. Any Tory drive in that direction is going to be substantially tempered by the Lib Dems, and given the increase in the lower tax bracket that's been agreed, I think this has the potential to work out well. As I said, we need to wait and see really, it would be a bit presumtious to go marching through the streets within 24hrs of him taking office

And so it begins again... the insidious shovelling of wealth up the class system until the proletariat eventually rebel. Last time it ended with the poll tax. I wonder how much sh!t we'll take this time.