Delegates at the Lib Dem conference have delivered their first blow to the party's leadership by including small businesses in proposals for equal pay for women.

On the first full day of the Bournemouth conference, party members voted overwhelmingly for small businesses to be included in plans for legislation forcing companies to carry out "gender audits" that would reveal if women were being paid less than their male counterparts.

Delegates rejected pleas from a line of senior MPs who said that small business should not be subject to the burden of more red tape - their cause not helped by the fact that they were all men.

Brian Cotter, a spokesman on trade and industry issues, called for an exemption for small businesses on the motion introduced by Baroness Walmsley who told the conference audience that discrimination was still rife among employers despite the Equal Pay Act's introduction more than 30 years ago.

"I was one of those people who thought inequality was a thing of the past but I was wrong. Female academic staff, who are among the best qualified in the country, earn on average £4000 less than their male counterparts. Nationally the pay gap between men and women was still 18 per cent," she said.

She revealed that a third of children live in poverty and as a result many women were denied education opportunities, creating a "vicious circle".

"With strong and effective measures the gap can be eliminated in eight years," Baroness Walmsley said before defending her motion. "There's enormous secrecy about who earns what. If we are able to identify who earns more we'd be able to do something about it."

Cotter, told delegates there was only one possible solution. "The only way we'll ever clear the pay gap is by working in partnership with business," he said. "Is it right that we should put small businesses under such pressure without examining the implications."

Dr Vince Cable warned the party that it was now a serious political player and the conference was not the place for "gesture politics".

"The big issue is what are you going to do with 2.5 million gender audit forms. I'm not sure how you are advancing the cause," he said.

Ann Morrison, a senior lecturer from Birmingham Northfield, summed up the view of party members.

She lambasted the exemption saying: "It's illogical, it's rubbish and makes me think that for once they're not thinking. You're books have to be audited by law. How long does it take to add up 11 employees' wages by gender? I'm sorry gentlemen but you've left your brains behind."