A senior Liberal Democrat AM says Labour should remain in a minority assembly government.
Lib Dem AM Mick Bates believes a coalition is a 'non-starter'
Montgomeryshire AM Mick Bates said this arrangement should be bound by a policy agreement signed by all four main parties.
Mr Bates told the BBC that a coalition with Labour would be "a non-starter".
Meanwhile, Labour MEP Eluned Morgan said the party could reach an "informal deal" on policy options without a formal coalition.
Mr Bates is the second member of the six-strong Liberal Democrat assembly group to publically oppose the idea of a coalition with the Labour Party, who have 26 seats - five short of an overall majority.
He told the BBC Politics Show that he wants to see a contract on issues agreed between parties, rather than a coaltion of power.
He feels such a deal would be electorally damaging when the Lib Dems come to defend their running of four Welsh councils against Labour opponents at the local government elections next year.
South Wales West AM Peter Black also made his opposition to such a coalition clear last week.
Mr Bates said he was worried that some politicians seemed more concerned about gaining power than about implementing policy to benefit the people of Wales.
Meanwwhile, New Zealand's health minister and Labour MP Pete Hodgson has been briefing the executive of the Wales Labour party on how parties can work together in order to form a stable government.
New Zealand has a similar electoral proportional representation system as Wales.
Eluned Morgan admits there will be tensions whatever is decided
There they have both a formal coalition and a system of cooperation between other parties outside government, which guarantees stability by doing deals on various policy issues.
First Minister Rhodri Morgan said that that the New Zealand experience demonstrated "that stable and successful government can be achieved in a system like ours.
"But that this outcome depends on progressive parties being willing to work together in arrangements which are more flexible than those produced by conventional first-past-the-post politics".
Mr Morgan added: "We are having to learn those lessons very fast in Wales, and I am working hard to make sure that Wales has a government at the assembly which takes us forward over the next four years".
Labour MEP Eluned Morgan said an "informal deal" could involve either Plaid or the Liberal Dems.
In terms of the "least worst option" for Labour, Ms Morgan acknowledged that it depended on which part of the party you spoke to and that there "will be tensions" no matter which direction they took.