In this state because we are not following the constitution
Following constitutional procedure might have led to a new government by now.
We seem to be in a state of confusion about the form of the next government. This seems to be because constitutional procedure is not being followed correctly. Perhaps the participants were too tired post election to think through the implications.
Gordon Brown is acting properly in remaining as Prime Minister for the time being but under the constitution he should have had first shot at forming a government, forcing the LibDems to decide whether or not to accept Labour’s offer (which could have included his replacement).
If it became clear this wasn't a runner (as with Heath in 74), Brown would then have resigned and advised the Queen to call for David Cameron to form a government. Cameron would have a choice: either lead a minority government (with or without an arrangement with other parties to enable it to retain the confidence of the House of Commons and pass a budget) or form a coalition with the LibDems and/or others.
But instead Nick Clegg insisted on talking to the Tories first, on the grounds they had more seats. While initially persuasive (and advocated by many commentators) this is not the point constitutionally - first because the consideration is about commanding a majority in the House rather than the most votes or seats and second because it puts the focus on the LibDems, a relatively small party which lost seats, rather than on Brown and Cameron. The current situation is therefore potentially the most undemocratic.
If the Conservatives had paused for thought on Friday morning, they might have concluded that it was best to send the LibDems to Gordon Brown first and force a choice upon them. If Labour and the LibDems made a deal, the Conservative view might be that it was vulnerable and not sustainable particularly since the Conservatives were the largest party and gained seats. On the other hand, if the LibDems felt they could not support Labour it would have been clear that Cameron would be PM, one way or another. It could be argued that either outcome would lead to a relatively democratic and clear result after an election in which no party won even if one party gained significantly. Arguably, Conservative impatience has prevented a clear result and even a favourable result for them.
As it is, the current situation, whereby the LibDems run from one party to the other trading negotiating points, would really only be appropriate if the Queen had asked Nick Clegg to form the next government.
Having said all that, I think it will work out one way or another.