The answer depends on your conception of politics, what you thing is going on now British politics is in a state of flux and, flowing from that, your strategy for progressive politics. If you think the vote is split and your priority is an alliance of angels tying Labour up with the LibDems, Greens, SNP, and Plaid Cymru to get the Tories out and proportional representation in, fine. If you look a bit deeper beneath the surface, then matters look somewhat different.
As I've argued before, Labour isn't a workers' party with a bourgeois leadership as per the Lenin's 1920 formulation, but is rather a proletarian party. Put away your images of cloth caps and chimney stacks, I'm using 'proletariat' in the old, old sense of people who sell their labour power for a living. That can take diverse forms, and attracts varied remunerative compensation based on region, skill level, availability, costs of reproducing these workers, and so on. As such, contra the depictions of proletarians in popular culture and A-level text books, it is a heterogeneous category of people to which the overwhelming bulk of people in our society will belong, do belong, and have belonged to. This doesn't and has never precluded status conflicts between different sections of our people, but it does indicate a substantive unity: that income is contingent primarily on one's ability to labour for an employer, regardless of how small or hefty that wage or salary is. Nevertheless, because material and autonomy privileges afforded by work spin off in lifestyle differences, positions that are privileged vis a vis one another, and the acquisition of different levels of cultural and social capital, certain sections tend to be more wedded to the prevailing system than others and are prepared to defend those advantages at their expense. This noisy, contradictory mess of a class built the Labour Party to ameliorate capitalism, not to overthrow it. It explains why the party has a left/right divide, why the right throughout the party's history have tended to call the shots and how the party has always accommodated itself to capitalism.
Making matters more complex is that British politics is undergoing realignment, and because the stultifying electoral system locks out new/challenger parties, the process is now working through the Labour Party - having had turns with the LibDems, BNP, UKIP, and the SNP using different classes and strata. To save writing it all out again, the ridiculous numbers of people who've joined Labour
... are drawn from the emerging occupations - the knowledge worker, the care worker, the precarious worker, forms of labour that are mostly concerned with the provision of a service in some way, work that has the production of social relations at its heart ... This section of people who have to sell their labour power in return for a wage or salary are a rising group. Just as the industrial worker was the "hegemonic" form of work and the left's preferred political agent of the past, so the networked worker (for want of a better phrase) is the increasingly dominant constituency in all the advanced countries. It's slowly waking up, therefore it is vital for the future health of our party that we be its party of choice.Politics isn't about an irrational, tribal affiliation to a label. It's about interests, and it's in our class interest to ensure Labour captures this movement of networked workers by addressing it, mobilising it, and standing up for it in the media, in Parliament, and at the ballot box. We are the progressive party not because it's a flash word that sounds nice. We are the organised expression of the wave of the future, of the overwhelming majority, of the universal interest. We stand a chance of becoming more than the sum of our parts if we organise everywhere.
This is the main reason why we shouldn't countenance a deal with the LibDems in any instance but the most exceptional circumstances. Like gestures of respect in the tragic event of a murder of a MP, or where the obvious outcome is uncertainty between the yellow of liberalism and the brown of fascism. Again, this isn't because they're uniquely objectionable, but because they're not a progressive party. Yes, sorry. They might like electoral reform, be (formally) anti-racist, believe in things like climate change, have a better position on the EU than most Trotskysists, and are alright (on paper) on matters of liberty and individual freedom. Dipping beneath the froth into the social substance that makes them up, the LibDems are, ultimately, a party of capital. That isn't to say they're primarily made up of business people - that isn't even true of Theresa May's Conservatives. Composition-wise, today's LibDems are a middle class party - a large smattering of the relatively privileged sections of our class, and a smaller sprinkle of the self-employed. Yet the interests it tends to are those of capital and the vanishingly small number of people who live off its unearned proceeds. We have an interest in overcoming our divisions and building a society in which capital is entirely socialised. The LibDems, in contrast, appeal to and reinforce those divisions to pose as better/more rational managers of capital's interests. The basis of liberalism reifies and fetishises the individual, becoming an abstraction providing the dull conformity and crushing tyranny of the market and the workplace philosophical cover. Any identity of interest between them and us is coincidental and episodic, as the experience of coalition government should remind us.
The choice isn't one of boneheadedly standing a candidate when the greater good demands a break from the norm. It's the refusal to subordinate our political project, of standing for the interests of the majority to another who does not, will not, and cannot.