David Cameron has defied repeated calls from Nick Clegg to launch a sleaze probe into Culture Secretary Jeremy Hunt's handling of the BSkyB bid, it has been revealed.
The Liberal Democrat leader believes the independent adviser on ministerial interests, Sir Alex Allan, should be brought in to consider the case.
The behind-the-scenes coalition clash emerged as Mr Clegg signalled that his MPs will abstain in a vote being forced by Labour on the issue tomorrow.
The Commons motion calls for Sir Alex to investigate whether Hunt misled Parliament and failed to take responsibility for his special adviser Adam Smith, who resigned after admitting his contacts with News Corporation had been too close.
The Lib Dem decision was said to have received "unanimous support" at a meeting of the parliamentary party on Tuesday evening.
Mr Clegg conveyed the news to Mr Cameron when they met earlier, according to a senior party source. "I don't think the Prime Minister was pleased about it," the source added.
"The decision not to refer it to Sir Alex Allan was the Prime Minister's decision, and we respect that.
"However, it is not a decision that is endorsed by the Liberal Democrats, therefore we don't think we need to endorse it, therefore we won't support it on the floor of the House."
The source said Mr Clegg had discussed the matter with Mr Cameron on a number of occasions over recent weeks, and told him that the Culture Secretary should be subject to a probe.
There were "clearly still questions remaining" after Mr Hunt's evidence to the Leveson inquiry last month - despite Mr Cameron's insistence that the issue had been settled.
Evidence of the coalition split will intensify pressure on the Prime Minister to call in Sir Alex for an independent assessment of whether the ministerial code was breached.
He is already facing accusations of double standards after triggering an investigation into Tory chairman Baroness Warsi, who has admitted failing to declare business links with a relative who accompanied her on an official trip to Pakistan.
A senior aide to Mr Cameron played down tensions with the Lib Dems, saying their decision over tomorrow's Opposition Day debate was "not unexpected".
"It's a party political motion not government business," the aide added.
Shadow culture secretary Harriet Harman said: "This is an important opportunity for the House of Commons to make clear the importance it places on secretaries of state being transparent and truthful to Parliament.
"I think members from all sides of the House will want to be sure that this issue is not simply swept under the carpet.
"Misleading Parliament is not just some outdated constitutional issue - it matters."
Labour is unlikely to win the vote in the House, despite the Lib Dem abstention. Even if the motion was passed it would only be a symbolic blow to Mr Cameron, as he retains the final say over whether his independent adviser investigates a minister.