The Tories have been "obliterated" in Britain's cities and reduced to "the party of the English shires", an analysis for the Liberal Democrats has found.

The strategy paper argues the Liberal Democrats are well-placed to capture further Tory seats, particularly in urban areas, and will be the main party to capitalise from Conservative "disarray".

"Conservative Collapse in the Cities" sets out how the Liberal Democrats are on course to create a "Tory-free zone" on councils in many towns. It predicts the party will make gains in next year's council elections in Scotland and Wales while Tory support will slip.

It shows how, over the last eighteen years, Tory parliamentary seats in cities outside London have been reduced from 43 to five, and from seven to zero in Cardiff , Edinburgh and Glasgow. "In Britain's main cities, we are the increasingly effective opposition to Labour and the Tories are in terminal decline," the paper says. The party has been buoyed by recent polls showing them gaining on the Tories and leading them overall in the South-east and South-west.

Matthew Taylor, the Liberal Democrat Treasury spokesman, said yesterday the Conservative party was in total disarray. "Scarcely a week goes by without internal squabbling in the Tory party. They have taken their eyes off the ball and there is every sign that we are catching them up," he said. "They are in no position to take on Labour in the cities, whilst in the South polls show the Conservatives trailing us."