A senior cabinet minister today sent the clearest signal yet that Labour supporters should vote Liberal Democrat in seats where Nick Clegg's party has a better chance of stopping the Tories.

The comments by the children's secretary, Ed Balls, are an indication that Labour is now resigned to a collapse in its vote on Thursday, and the best it can hope for is a strong performance by the Lib Dems to prevent David Cameron getting enough seats to form a government.

Senior Labour figures have hitherto been reluctant to endorse a vote for the Lib Dems, for fear of looking weak. But all the latest polls show that a hung parliament is still the likeliest outcome of the election on Thursday, with Labour trailing second or third in share of the vote.

Asked in an interview in tomorrow's New Statesman what Labour voters should do in Tory-Lib Dem marginals, Balls – normally seen as a tribal Labour loyalist – says: "I always want the Labour candidate to win, but I recognise there's an issue in places like North Norfolk, where my family live, where Norman Lamb [the Lib Dem candidate and sitting MP] is fighting the Tories, who are in second place. And I want to keep the Tories out."

The comments could be read as an indication that senior Labour figures are trying to boost the anti-Tory vote in the hope of forming a Labour-Lib Dem coalition in the event of a hung parliament after the election on Thursday.

Balls also told the magazine: "It will be very tough for us to get a majority. But it will be very tough for the Tories to get a majority. Who turns out to be the largest party [in a hung parliament] remains to be seen."

Balls's overture to the Lib Dems does not extend to an embrace of proportional representation, which Clegg is expected to make a key demand of any potential coalition partner.

Balls told the Statesman that "PR leads to a politics of behind-closed-doors deals after elections. It makes it harder to make long-term decisions and it gives more power to small parties ... and I don't believe as a matter of principle that coalition governments are better."

He added: "That doesn't make me hostile to the Lib Dems or unable to work with them. On education, I could work with the Lib Dems very easily. On most things, we agree ... but I also recognise that the Lib Dem coalition with the Conservatives in Leeds, for example, has done a terrible job."

Asked if he would be opposed to making a deal with the Lib Dems and sitting around the cabinet table with Clegg and other members of his party, he said: "Of course not. You deal with the election result as it comes."

He matched his call for some Labour voters to vote Lib Dem with advice for Lib Dems in Tory-Labour marginals: "I urge Lib Dem voters to bite their lip and back us."

The children's secretary also hit out at Sky News for alleged bias. "The BBC has fought valiantly to be fair and balanced, but Sky News and most of the newspapers are deeply partisan," Balls said. "This election is much more open than the newspapers and Sky News suggest. The polls are very tight."

Meanwhile the business secretary, Lord Mandelson, told the magazine that the marketing of the Tory party under David Cameron "says a lot about the strength of New Labour".

Mandelson said: "The point about the Conservatives is that they believe they cannot win an election by running against New Labour. They are for the political landscape that we have created.

"The whole point of Cameron's Conservatives is to market his party in a way that leads people to believe they've put their past behind them, that they're a continuum of New Labour. They are not, as it happens. But the fact that they feel they can only win power by marketing themselves in that way says a lot about the strength of New Labour."