Prime Minister David Cameron says his deputy Nick Clegg will be in the "inner core" of government.
On BBC One’s Andrew Marr show he hailed what he called a "progressive alliance" between the Conservatives and Lib Dems.
He said the coalition government was not just about grabbing power but was based on shared values, describing himself as a "Liberal Conservative".
He also confirmed left wing campaigner Will Hutton would lead an inquiry into cutting top public sector pay.
Mr Hutton, who is vice-chairman of the Work Foundation think tank, was the "right" person to lead such an inquiry, said Mr Cameron. Only recently he urged the Lib Dems to shun a Tory coalition, in an article for The Guardian.
End to large bonuses
Mr Cameron said NHS managers and other senior civil servants should not earn "more than 20 times the lowest paid" in their organisation and they should not be paid large bonuses, of the kind he said had been approved "in the the last days of the Labour government".
The same principles should apply to the BBC, he added, although the Corporation would not be included in the review as it was independent.
Labour MP Frank Field is also understood to have been offered a role with a new Poverty Commission.
Mr Field was minister for Welfare Reform in Tony Blair’s first government and last year led a successful campaign against the abolition of the 10p tax band.
Mr Cameron said he had considered trying to set up a Conservative minority government, with a basic Lib Dem agreement not to vote it down, rather than a full coalition, when his party failed to win an overall majority in last Thursday’s general election.
Although such a move would have been "easier and simpler" and was what people expected, Mr Cameron said he and Mr Clegg "both decided to take that risk" and go for a full coalition which he said was "in the national interest, had a majority and is strong and stable".
‘Inner core’
He said a document would be published shortly setting out in greater detail how the coalition will work together – but he insisted Mr Clegg would be in the "inner core" of the government, which meant he would chair cabinet committees, which guide policy formation, and be consulted on ministerial appointments and sackings.
"The deputy prime minister is clearly part of the inner core. When it comes to government appointments and, if I can put it this way, disappointments, of course that is the prime minister’s job.
"But this is going to be something that we try and do together".
Mr Clegg will stand in for Mr Cameron at prime minster’s questions, when the Conservative leader cannot attend, but Lib Dem MPs would continue to sit together in the Commons and the two parties would fight each other at by-elections.
But the prime minister made clear he expects the two parties to work closely together in government and hopes to avoid holding separate "political cabinets" made up only of Tory or Lib Dem ministers.
Like Mr Clegg, Mr Cameron acknowledged the coalition deal would upset some in his party, but he insisted it was more than a marriage of convenience, saying: "I have always described myself as a Liberal Conservative."
And he paid tribute to the "brave and courageous" actions of Mr Clegg, whose party is meeting later to discuss the coalition deal and who has faced criticism from one of his predecessors, Charles Kennedy.
In an article for the Observer, Mr Kennedy said he feared the coalition would he would wreck plans for a progressive centre-left alliance with Labour and he feared the Lib Dems would be swallowed by the Tories.
Mr Cameron described his deal with the Lib Dems as a "progressive alliance" based on shared values of "more freedom in our society" and the decentralisation of power. He insisted "this is not just about a group of people who have got together for power".
He also announced the new Office of Budget Responsibility would be launching a full audit of government spending on Monday, saying Labour had made "crazy" spending decisions over the past year that "no rational government would have done".
He refused to rule out an increase in VAT in Chancellor George Osborne’s forthcoming emergency budget, but said: "We believe that spending should bear the brunt of the burden in terms of cutting the deficit."
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