Senior insiders with the federal Liberals and New Democrats have been holding secret talks about the possibility of merging their parties to form a new entity to take on the Conservatives, CBC News has learned.

Many Liberal insiders confirmed that discussions between the two parties are not just focused on forming a coalition after an election or co-operation before one, but the creation of a new party.

The new party would possibly be named the Liberal Democrats and there has been tentative talk about what a shared platform would look like and an understanding that a race would be required to choose a new leader.

"Serious people are involved in discussions at a serious level," Warren Kinsella, a former adviser to former prime minister Jean Chrétien, told CBC News.

Warren Kinsella, former adviser to Jean Chrétien, says Liberal and the NDP insiders are discussing the possibility of forming a new party. (CBC)

Kinsella would not say who was involved in the discussions, saying he did not want to "deter" people.

He added that with the Liberals polling at around 25 per cent support, a merger necessitates consideration.

"The reality is that we are in a bad position," Kinsella said.

"We don't want to see the Liberal Party of Canada disappear and I'm sure there are a lot of New Democrats who are getting fed up with their fate."

Recently, there has been talk about the possibility of a coalition between the Liberals and the NDP.

"If it is doable, let's do it," Chrétien recently told CBC's Power & Politics.

Liberal MP Bob Rae wrote a blog about a coalition he was part of in Ontario 25 years ago as leader of the provincial NDP, saying the "government worked effectively and efficiently."

Former Saskatchewan NDP premier Roy Romanow has also said the idea is worth considering.

Last week, a poll suggested that a coalition led by NDP Leader Jack Layton would beat Prime Minister Stephen Harper's Conservatives while one led by Liberal Leader Michael Ignatieff would lose.

In an interview with The Canadian Press over the weekend, Ignatieff said he would be prepared to lead a coalition after the election, but appeared to rule out any agreement to form a new party with the NDP.

"The talk of merger is absurd," Ignatieff said

Kinsella said that the idea hinges on Ignatieff and NDP Leader Jack Layton getting together and having some "measure of agreement on how to move forward."

Kinsella admitted an agreement to scrap the Liberal party and create a new one would upset some members.

"I can't see it being done without some bruises or some bruised feelings," he said.

Liberal insider David Herle says he's 'outraged' over the idea of abolishing the Liberal Party of Canada to form a new party with the NDP. (CBC)But David Herle, another Liberal insider who ran two election campaigns for former prime minister Paul Martin, slammed the notion that some Liberals would be willing to kill off the Liberal Party of Canada.

"I find it an outrage, frankly. I think it's astonishing that people have leaped to such a broad conclusion and that anybody is willing to throw over the history and role that this party has and continue[s] to play in the country. I'm appalled by it," he said.

Herle agreed that the talks have been serious but is confident the ensuing backlash will kill the idea.