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The Liberal Democrats are planning to move out of their Cowley Street headquarters in Central London, the party has said.

A spokesman denied the move was being forced on them by lack of cash.

The party has had to shed staff since entering government due to the loss of Short money - paid to opposition parties to fund research.

The spokesman said the party simply wanted to move to "more modern" offices.

The Lib Dems lease the Cowley Street premises, close to the Houses of Parliament and Westminster Abbey, from the Church Commissioners for an annual fee of £225,000, according to the party's annual accounts.

A spokesman said they were now looking for "more modern and more appropriate buildings", adding: "Cowley Street does not meet the staff numbers we have got."

The party signed a new lease in 2000 on the building, which recently hit the headlines during student protests, when police had to cordon off the road leading to it.

The Lib Dems have been based in Cowley Street since their formation in 1998. Before that it was the headquarters of the SDP.

The Lib Dem spokesman denied the party was in money trouble, saying it had "managed the reduction in Short money successfully".

In a statement, Lib Dem chief executive Chris Fox, said the party was "outpacing Labour in terms of individual donations" and was in good financial health.

The news comes as Lib Dems prepare to gather in Sheffield, where Nick Clegg is an MP, at the weekend for what party workers are describing as their "biggest ever" spring conference, with 3,000 delegates expected.

Protests are expected in the city - but MP Norman Lamb, Mr Clegg's Parliamentary aide, said the party was "not hiding" and planned to reach out to voters in Sheffield as well as party members.

Mr Clegg has faced criticism over his U-turn on student tuition fees and the axing of a grant to Sheffield Forgemasters.

Mr Lamb brushed off suggestions the party faced a hammering at English local elections on 5 May, insisting the "the mood of the party remains good".

But he said the leadership wanted to use the weekend in Sheffield to reassert the party's own identity - distinct from their Conservative coalition partners.

"It is important for people to understand that coalition government can be very functional."

"But at the same time there is this absolute need to maintain our identity," he told reporters at a pre-conference briefing.

Mr Lamb said the party would be handing out pocket-sized cards to members containing a list of things the party had achieved in government, including tax cuts for the lowest paid and the "pupil premium".