Well, the British system is very different from the American system.
Parliament has to approve the bills, or they won't get passed. But (more or less) it is the job of the Government (the executive branch) to
propose the bills. That's what the Government
is: it's a group of people who can promise Her Majesty The Queen that if they propose a bill, it will get passed. They make this promise because they have done a deal with a majority of the members of Parliament that if they (the Government) propose a bill, then they (the Members of Parliament) will pass it.
For example, it is not even conceivable that the Parliament could propose their own Budget and pass that; rather, it's the job of the Government to propose a Budget that the Parliament will pass. This is very different from the American way of doing things.
If the Government can't get its bills past Parliament, then they have failed in their one job. In that case, the Queen asks someone else if they can form a new Government that
can get a majority in Parliament; if that's not possible, then they have to call a general election and see if they can do it after that.
So if the Lib Dems bumped Clegg off the Lib Dem leadership, he might keep his position in the Government (which is not technically dependent on his leadership in the party, they could make
me Deputy Prime Minister if they wanted to), or the Government might sack him from it. The real question would be, would the Government then be able to put together enough Conservative and Lib Dem votes in Parliament to pass their bills? Now that's what the Lib Dems
can do --- they can decide that they will stop voting with the Conservatives, at which point the Government will collapse.
Any questions?
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