The Conservatives support new legal rights for same-sex couples, shadow home secretary Oliver Letwin has said.

As a bill put forward by Lib Dem peer Lord Lester began its second reading on Friday, Letwin announced a major shift in his party's policy.

He did not go as far as the bill put forward in the Lords - declining to back gay weddings - but he called for the right of consultation on a partner's life-threatening operation and changes to inheritance rules over assets or the tenancy of homes.

Letwin ruled out extending rights to co-habiting couples they have the option to marry if they choose.

"Marriage is a tremendously useful and important thing for bringing up children," he said. "Those of us who are heterosexual have the choice to marry and Conservatives believe that people should exercise that choice if they want any of the rights and benefits."

"But homosexuals can't marry. We don't want to create a pale imitation of marriage, but we do recognise that there are real grievances."

Lord Lester, introducing the second reading debate on the Civil Partnerships Bill, said current legislation was now seriously out of step with modern life. He also argued English law was behind many European countries including France and the Netherlands as well as Canada.

"The pattern of family life has changed dramatically and continues to change. Marriages in Britain are now at their lowest level since 1917, and the divorce rate is the highest in the European Union. There has been a large increase in cohabitation in recent years, and a quarter of all children are now born to cohabiting families," he said.

"Yet this spread of cohabitation outside marriage has not yet been recognised through any coherent law reform. Along with the increasing number of heterosexual couples choosing not to marry, or choosing to cohabit before they eventually marry, there has been an increase in the number of homosexual men and women who wish to secure public and legal recognition for their partnerships."

The Lib Dem peer claimed his bill did not represent a threat to marriage. The government's support for marriage should not be a reason for the state to fail to protect those who choose to cohabit, or who have no choice, he argued.

"The time is over-ripe for legislation to create a legally recognised civil partnership system. The law needs to do more than to equalise the position between same-sex and opposite-sex couples, because of the inadequate nature of the rights conferred on unmarried couples generally," he said.

But Letwin, who has been re-thinking key areas of traditional Conservative policy, said politicians should avoid pontificating.

"I think that is very important, but not for moralising reasons. People have their own moralities and it is very important that they should, but political parties and politicians, for all sorts of reasons, are not good people to pontificate about that and we don't intend to," he told the BBC.

Letwin has already been praised for renewing the Conservative approach to law and order, calling for a "neighbourly society" to prevent young people becoming involved with the "treadmill" to crime.

But the Liberal Democrats said the Conservatives' new policy was a "fudge".

Simon Hughes, the party's home affairs spokesman, said: "If Tories were either up to date or committed to civil rights they would, without compromising the sanctity and status of marriage, support the Liberal Democrat Civil Partnerships Bill."

"This is a sadly timid fudge - but it won't get the Tories off the hook and nor should it," he added.