Vince Cable has insisted he had "absolutely no knowledge" of damaging polling conducted in Nick Clegg's constituency by his friend Lord Oakeshott, who has quit the Liberal Democrats.
The Business Secretary denied he knew about controversial polling leaked to newspapers this week which showed the Lib Dems could lose the Deputy Prime Minister's Sheffield Hallam constituency at the next general election but could fare better with a different leader.
Once Lord Oakeshott was widely named as the source, speculation became rife that his former ally Dr Cable was lining up a potential bid for the party leadership after disastrous local and European election results for the Lib Dems.
But Dr Cable moved to quell the rumours he was involved in the polling.
Speaking from Beijing in China, where he was on a Government trade visit, the Business Secretary said: "Parties conduct polls all the time at national and local level.
"In this particular case, Lord Oakeshott asked my election campaign manager if we wanted a poll done in my local constituency, we said yes. It was a private, local poll done for general election planning, absolutely nothing to do with national leadership.
"I was aware that he was conducting other polls around the country and I was certainly told in general terms what the trends were, and in one particular case concerning my parliamentary private secretary Tessa Munt from Wells, we sat down and discussed the details with her.
"But I had absolutely no knowledge of, or certainly was not involved in any commissioning of the surveys that were done in Sheffield Hallam and Inverness, and indeed I criticised him very severely yesterday."
Dr Cable described Lord Oakeshott as a longstanding friend that he hoped would consider rejoining the party in the future.
He said: "I very much regret it has finished up in this way and I regret he has decided to leave the party.
"I have given a very full and complete explanation of what I knew about these polls. I think the explanation is straightforward.
"We have been through some very bad elections, a lot of people have been very bruised by it. I want to work with my party colleagues to put it back on track.
"The information released to the press and commissioned about Sheffield Hallam and Inverness was damaging. I knew absolutely nothing about that, I was not involved with it in any way. I made that clear yesterday."
Dr Cable added: "We have clearly disagreed about the handling of this, I have made that very clear, and I want to make it clear I will continue with my work and I hope he reconsiders his position about the party in due course."
The Business Secretary's comments follow the emergence of the ICM poll findings from five crucial Lib Dem constituencies in the Guardian this week.
The results indicated the party would fare better in Mr Clegg's own constituency and those of other senior figures if the Deputy Prime Minister was replaced.
After it emerged that Lord Oakeshott was almost certainly the instigator of the polling, Mr Clegg threatened him with disciplinary action.
The peer quit the party today, lashing out at the "disastrous" Deputy Prime Minister and saying he left the party with a "heavy heart".
Announcing his resignation, Lord Oakeshott said: "I am sorry I have so upset and embarrassed my old friend Vince Cable and that we were not able to talk before he issued yesterday's statement from China.
"The combined message of these five professional and reputable ICM constituency polls, Nick Clegg's dire approval ratings year after year in all national polls, and Thursday's appalling council and European election results is crystal clear: we must change the leader to give Liberal Democrat MPs their best chance to win in 2015."
He added: "A few stout-hearted MPs and peers and hundreds, maybe soon thousands, of candidates, councillors and Lib Dem members all over Britain are now fighting constituency by constituency for a leadership election.
"I have tried to give them the evidence they need to make the change. I pray that they win, and that the right man, or preferably, woman is now elected to save the party."
Stephen Tall, co-editor of influential party blog Lib Dem Voice, has called for Mr Clegg's resignation.
Writing on his blog, Mr Tall claimed the party could once again find itself in the role of kingmaker in a hung parliament after next year's general election.
But he argued that Mr Clegg was the wrong leader to negotiate a deal which would be acceptable to Lib Dem members.
Mr Tall also raised the possibility of Mr Clegg continuing as Deputy Prime Minister while resigning the party leadership.
He wrote: "I don't think Nick will be able to secure a coalition deal with the Conservatives that Lib Dem members will be prepared to sign up to: there is too much suspicion lingering from the current deal.
"Nor do I think Nick will be able to do a deal with Labour that he will be able credibly to communicate to the voters as anything other than a complete about-turn on the previous five years of cohabitation with the Tories.
"In short, Nick is one of the impediments (not the only one, but a not insignificant one) to the Lib Dems being free to negotiate a second coalition if that's the hand we're dealt."
He added: "If Nick Clegg stands down now as party leader, though, he would go out with his head held high.
"And though it's unconventional and has risks, I see no real reason why Nick couldn't remain as Deputy Prime Minister through until May 2015, allowing the new party leader to present the party's manifesto unencumbered by the compromises of coalition."
Lib Dem Transport Minister Baroness Kramer defended Dr Cable.
She told BBC Two's Newsnight: "All I can say is Vince has made a categorical statement, I'm comfortable with that.
"He said that basically (Lord Oakeshott's) behaviour has been inexcusable.
"As far as I'm concerned he's doing what he should do, which is he's in China working for the British economy and state."
Asked whether Dr Cable knew that Lord Oakeshott's polls were asking about the Business Secretary's suitability as a potential Lib Dem leader, Lady Kramer said: "I haven't talked to Vince.
"Knowing Vince I very much doubt it because you just look at the statements that Vince made before he left for China, he was very supportive of Nick Clegg, he understands what our job is for the next year, he's made those same kind of statements in China."
Party activist group the Social Liberal Forum, which represents left-wing members, called for a vote to be held on Mr Clegg's leadership.
Writing to the Times, the group said the loss of 300 Lib Dem councillors and 10 out of 11 MEPs last week cannot just be blamed on being in coalition with the Tories.
The group said in its letter: "It is right that this debate should include who leads the party.
"As a democratic party, the membership will hold the key to this re-examination."