The Lib Dem leader and deputy prime minister, Nick Clegg, announces that the government will abandon the bill to reform the House of Lords ITN

The coalition government has come under its greatest strain yet after it was forced to abandon flagship constitutional reforms and the Liberal Democrat leader accused some of his Conservative partners of betraying the mutual trust needed for the two parties to govern together.

Nick Clegg confirmed rumours that the government has dropped a bill which would have introduced elected peers to the House of Lords and dramatically reduced its size, something he said he was forced to do after Tory backbenchers and the Labour party refused to back a crucial vote on the legislation last month .

As a result, the deputy prime minister said he would instruct his MPs to vote against another bill which would have cut the number of MPs by redrawing the constituency boundaries – a change opposed by many of the 57-strong Lib Dem MPs since it is expected they would lose 15 or more seats.

In a statement to a news conference in London, Clegg was scathing about the bill's opponents, referring to them as "an establishment resistant to change [and] vested interests who benefit from maintaining the power of political patronage, while keeping the power of people out".

He was also specifically critical of the Tory rebels for trying to "pick and choose" coalition policies, and accused Labour of "allowing short-term political opportunism to thwart long-term democratic change".

Clegg pledged that, despite the upset, his party did not want to quit the UK's first coalition government since the second world war. "My Liberal Democrat colleagues and I remain focused on the urgent task that brought the coalition together: rescuing, repairing and rebalancing our economy," he said. "And, just as we are determined that this government delivers economic reform, we are determined to deliver social renewal, too."

However, his barely concealed sense of betrayal and raw language will fuel speculation that the events spell the beginning of the end of the coalition. Clegg twice mentioned his MPs had voted for deeply unpopular rises in tuition fees and reform of the NHS.

Tories, for their part, claim that Lib Dems are betraying a promise to vote for the boundary review in return for being able to hold a national referendum on introducing a new alternative vote system last year.

Linking the two separate constitutional changes was "clever politics," said Tim Montgomerie, the influential editor of the Conservative Home news and comment website.

"There's no trust left in this coalition: they may be able to keep going, but it will be increasingly miserable for the next two to three years," said Montgomerie. "The great thing at the beginning was the 'high trades' … big things in return for other big things. Now it's just protection of what we have, no further advance, no flexibility, no willingness to help each other out."

Following pledges by all three major parties to reform the Lords at the last general election, the Electoral Reform Society said parliamentarians had "squandered consensus, in the name of cheap point scoring and political games".

"This isn't about the failure of one party, one government or one bill, but of politics itself," said Katie Ghose, chief executive of the Electoral Reform Society. "Each party has had an opportunity to break the impasse. Each party has chosen not to."

The shadow justice secretary, Sadiq Khan, said the announcement showed a "spectacular failure of leadership" by the Tory leader and prime minister David Cameron.

The announcement will be seen by some as a personal blow to the authority of Clegg, who has already seen the party's cherished hopes of voting reform defeated in last year's referendum, while he has asked his MPs to vote for bills deeply unpopular with Lib Dem supporters, including higher university tuition fees and the NHS shakeup.

However, Lib Dem peer and former MP Lord Carlile told the BBC World at One programme: "Nick Clegg is in a very strong position as leader of the Liberal Democrats, expected to lead us strongly into the election, so I don't believe any of the speculation about the threats to Nick Clegg's future."

In an apparent reference to the business secretary, Vince Cable, or his supporters, Carlile added: "And I believe senior Liberal Democrats should stop posturing about the leadership."

Clegg also held out hope to his party activists and other supporters of Lords reform, saying "My hope is that we will return to it in the next parliament" after 2015.

The coalition agreement included a pledge to bring forward legislation to reform the House of Lords, one of the Lib Dems' unbreachable requirements of a deal to govern together.

In July, MPs voted by a large majority in favour of the bill, but the government was forced to drop another crucial vote on the parliamentary timetable after more than 100 Tory backbenchers and the Labour party signalled they would vote against it. Clegg said he agreed to Cameron's request for more time to persuade his backbenchers, but that the prime minister had since told him that he could not do so.

This would have made it all but impossible for the government to get a final vote on the proposals for Lords to be elected for single 15-year terms, while using up much of the parliamentary timetable over the next three years, said Clegg.

"It is obvious that the bill's opponents would now seek to inflict on it a slow death: ensuring Lords reform consumes an unacceptable amount of parliamentary time," said Clegg. "Clearly it would be wrong for me to allow parliament to be manipulated in this way, not least at a time when there is so much else for us to concentrate on."

Defending the importance that Lib Dems had put on the changes, Clegg said: "An unelected House of Lords flies in the face of democratic principles and public opinion. It makes a mockery of our claim to be the mother of all democracies."

The Lib Dem leader revealed he had offered the Tory leader David Cameron a compromise, under which there would be a referendum on Lords reform at the next general election in 2015, after which the changes to both Lords and the boundaries would take place in 2020 – but it was rejected.

Clegg also defended his decision to link Lords reform to the boundary review, for which final proposals were due this autumn, as "both part of a package" arguing that one without the other would create an "imbalance" in the political system. "If you cut the number of MPs without enhancing the legitimacy and effectiveness of the Lords, all you have done is weaken parliament as a whole, strengthen the executive and it's over-mighty government that wins," he said.

Khan said Labour "remained committed" to Lords reform in principle, adding: "That is why we took the unprecedented decision of voting for the bill in the House of Commons despite some serious reservations about the legislation. And why we gave a commitment to support the bill in progressing from the Commons to the House of Lords. In contrast, 91 Tories voted against their own manifesto commitment."