The Liberal Democrats could lose nearly half their seats and still remain a party of government, most probably in coalition with the Conservatives, a source close to Nick Clegg has said.

As the deputy prime minister declared Wednesday’s budget as the “last act” of the coalition, it emerged on Saturday that the highest levels of the party still believe it could return only 30 MPs on general election day but still hold the balance of power.

Those close to the Lib Dem leadership are convinced the Tories will be the largest party after 7 May, although there are concerns that David Cameron would snap up an offer from Northern Ireland’s Democratic Unionist party (DUP) to give them the required numbers to form a government.

30 MPs would be enough. I can’t see any way in which Labour forms the largest party. Everything is in the Tories' favour Source

Party strategists realise that there is an opportunity for Lib Dems if the Tories fail to attain enough seats to make a government using the DUP’s small number of MPs. It is further conceded among senior Liberal Democrats that even attaining 40 seats would be an “amazing” achievement for the party, given the results of current polls. The party won 57 seats in 2010.

A source close to Clegg said: “Reaching 325 [MPs] is the key and if the Tories have 295, then we would be the ones to get them to that number. Around 30 MPs would be enough. I can’t see any way in which Labour forms the largest party. Everything is in favour of the Tories. It is going to be really tough. To get 40 seats would be amazing, but 30 could still put us back in government.”

The latest Opinium/Observer poll has the Lib Dems on only 7%, with just 28% of the public saying that the Lib Dems’ decision to join the government was a good thing. However, a third (32%) say the Lib Dems will be better off in the long term for having been in government, while 32% disagree.

Clegg said that, two months before election day, the coalition had – in the form of the budget – completed its last act of any “significant decision-making”. Despite the privately held concerns over May’s results, in his speech to his party’s spring conference on Sunday Clegg will publicly insist that his party will “surprise” people at the general election.

He is expected to tell party activists: “I’ve heard the predictions. I’ve seen the polls. But let me tell you this: we will do so much better than anyone thinks. In those seats where we are out in force, making our case loudly and proudly, we are the ones making the weather. I’ve seen it for myself in Liberal Democrat seats across the country.”

It is understood that there was some irritation in the leader’s office at an interview given by the Lib Dem MP for Westmorland and Lonsdale, Tim Farron, with the Financial Times last week in which he appeared to be looking to a future without Clegg.

Farron, who is one of the favourites to succeed the deputy prime minister if he should stand down or even lose his seat in Sheffield Hallam, said the party deserved “two out of 10” for its handling of the politics of coalition government. He also suggested that the Lib Dems might wish to prop up a minority government after May rather than join a coalition, and take ownership of one government policy area. Farron said the decision to enter coalition with the Tories has “tarnished” the party in an interview with the Mail on Sunday that will have further angered Clegg. Looking ahead to what will happen after the election, he said: “Whoever’s leader, whether it’s Nick or somebody else … we’re dead.”

If the Lib Dems are able to form another coalition, Clegg intends to remain as deputy prime minister and disperse his MPs around the various departments. Some senior figures agree with Farron that the Lib Dems should take over one department, such as education, but Clegg believes the current model offers the party the best chance to punch beyond its weight.

A source close to Clegg described the interview as “hubristic” for talking about a future without him, although the Observer understands that there is now a group within the Lib Dems looking to the future. One senior parliamentarian said there was a hunt for an ABCD candidate – Anyone But Clegg or Danny [Alexander]. Another faction, he claimed, was seeking an ABCDEF candidate – Anyone But Clegg, Danny or Even Farron.

Other potential candidates to succeed Clegg include the health minister, Norman Lamb, and the MP for Cardiff Central, Jenny Willott, who has picked up a loyal following in recent weeks.