The Alliance was essentially a Coalition which lasted from 1981 to 1988 and ended in the fusion of the two parties and two break away parties - which still exist in the far reaches.
Going back to the Twentieth Century, the first Liberal Coalition Government was the Great Liberal Government of 1906 which led by Campbell Bannerman won a landslide built upon a secret electoral pact with the newly formed Labour Party. The advantage was a temporary gain for the Liberals but in the process they had created a competitor party which soon overtook the Liberals at the Polls. The next attempt at Coalition Politics was the 1910 Cross-Party Conferences with the Conservatives championed by King George V and David Lloyd George. They failed to diffuse the constitutional battles over Home Rule and Lords Reform but laid the foundation for Lloyd George's latter Coalitions with the Conservatives.
By 1910, the Liberal Party had been thwarted by the House of Lords and lost ground at the 1910 General Elections, we finally got the People's Budget Approved and the powers of the Lords reduced, but now only kept in power with Irish Nationalist and Labour support. By 1914 following numerous foreign policy crises which foreshadowed the First World War - a Liberal Government found itself fighting a War which inevitably meant the compulsion of men into war (ie Conscription) to which the party was fundamentally opposed. In the National Interest (and perhaps thinking that a war might postpone difficult problems like Women's Suffrage and Ireland) Asquith took the Liberals into war, despite being faced with a divided Cabinet (Burns, Lansdowne, Trevelyan, Lloyd George and Simon were against - at first). For the sake of the Liberal Party who became tarred with the stain of war, he ought to have resigned and let the Tories fight the War (since Tories like Amery had been pushing the German menace for years) This would have prevented the Labour Party claiming the mantle of anti-war agitation (for which people like Macdonald and others were persecuted ruthlessly). Asquith's position was deliberately undermined by a coalition of Newspaper proprietors, militarists and ambitious politicians like Lloyd George who in a democratic coup d'etat replaced him in 1915.
Lloyd George then use corrupt honours trafficking money raised by Maundy Gregory to fund the Coalition and a "Coupon Electoral Pact" with the Conservatives to stay in power. Lloyd George won the war but the peace he presided over at Versailles was a Carthaginian Peace which lay the foundations of the Second World War and set up a system of reparations which weakened the European Economy. He attempted to entrap the Conservative Party into a permanent Centre Party in opposition to Socialism which caused a Conservative Backlash which ended his premiership. The betrayal of Asquith created a split in the Liberals (only temporarily patched up in 1923) which lasted until his death in 1945, his secret fund of corrupt money was used a way of debilitating the Liberal Party as it prevented attempts to put party funding on a sound footing (the Million Pound campaign was blighted by the prospect of easy money) and he eventually recaptured the Liberal Party in 1926.
Whilst the Lloyd George Coalition won the First World War, brought democratic reforms (womens suffrage), Irish Independence, Social measures it effectively destroyed the Liberal Party as an independent party of government in the process and led to a series of Party Splits.
In 1931 , another National Crisis -(Caused by a profligate and directionless Labour Government) led to a National Government of all of the Parties which then became a vehicle for the Splitting of Labour and the Liberal Parties, the introduction of Protectionism by the backdoor (something which had seen a Conservative Government defeated at the polls in 1923) and the dominance of Conservative Politics until 1940. The Liberals went into the Coalition in the National interest, were tricked in government and then split, the true liberals under Samuel (opposed to Protection) leaving, and the tricked liberals (under Simon) becoming National Liberals becoming inbroiled (like Lloyd George himself) in the Appeasement of Nazi Germany.
Tory and National Liberal (and National Labour) Appeasement had led to War, the smoke filled corridors of power being used to block the voices of dissent by ex-liberals like Winston Churchill.
The true Liberals like Archie Sinclair supported Churchill and helped in the famous Norway Debate to unite with Die Hard Tories and Labour Patriots (Ernie Bevin) to bring down Neville Chamberlain and finally end appeasement. Even arch appeaser Lloyd George settled a score with Chamberlain and helped (though he refused to join the Coalition Government and held out for Petain Style defeatist peace with the Nazis).
Winston Churchill's Wartime Coalition of 1940-45 was the Greatest of the Coalitions and Liberals helped to win the War (Archie Sinclair was Air Minister during the Battle of Britain and terrible bombing of Nazi Germany) and create the Welfare State under the Liberal Beveridge Plan. Yet all the electoral credit finally went to Labour as the public were sick to the stomach of Tory led Coalition politics.
The Final Liberal Coalition was the Lib-Lab Pact of 1977-78 which helped stabilise the UK economy at time of National Crisis. Debt was controlled, Reforms brought in, and Inflation curbed. Yet the Party was punished at the polls and the pact broke up leading to a period of minority Labour government which saw the winter of discontent and then 11 years of Thatcherism.
So Coalition Politics did bring temporary resolution to a National Crisis in 1910,1915,1931,1940 and 1977, but at the cost of long term damage to the Liberal Party and also a corrosive effect on the Nation (World War One ,Corruption, the 1930's Depression & Protection & Appeasement etc)
For the Liberal Party each Coalition brought electoral disaster and Party Splits, despite personal monetary gain for Cabinet Ministers.
Coalition/Partner Form Immediate Benefit Long Term Loss
1906/Labour Secret Pact Landslide Win 1906 Established Labour
1910/Irish Nats Voting Stay in Office 1910-5 Irish Probs, Drift to War
1915/Cons Coalition Win War, some reform Party Split, loss of votes
1931/Con/NatLab Nat Govt Office, Save Econ? Split, Votes, Tariffs, War
1940/Con/Lab War Coal in War, Beveridge Labour Gain
1977/Lab Pact Economy Loss of Votes
2010/Con Coalition Ministers, Save Econ? ????? (see above)
So in voting terms, the 1910-22 coalitions saw a fall in support from 43% to 28% and the 1931 Coalition saw a fall from 23% to 11%, only the 1940-5 coalition saw a rise in Liberal Vote from 6% to 9%, yet a decline in MPs from 20 to 12, with Labour getting the landslide. The 1977 pact saw a decline in the polls from 14% to 6%. So far the 2010 Coalition has seen the dramatic collapse of the Lib Dem Vote from 25% to just 9%