The Tories failed to offer enough to satisfy the Lib Dems. At which point Gordon Brown announces that he will stand down by September, thus removing the major objection the Lib Dems had to forming a coalition with Labour.
While commentators are speculating that we'll end up with a Labour/LibDem alliance, the Tories give in and announce that they are willing to hold a referendum on electoral reform, thus removing the major objection the Lib Dems had to forming a coalition with the Conservatives. And out of the two options, Tory/LibDem would give an outright majority while Labour/LibDem needs the co-operation of almost all the others.
I should point out to the non-Brits that this is not how UK politics generally work. What usually happens is that on Thursday everyone votes, by Friday lunchtime enough of the results are announced that there's a clear winner, over the weekend the winner shuffles the cabinet and on Monday we have a government. Hung parliments are rare in Britain, and so no-one quite knows what to do with one. My bet is still another election before the end of the year.