Hung Parliament, how are decisions made?

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If there is a hung parliament, what is the process for making decisions?

Supposing Labour and Tories win approximately equal votes, and Lib Dems are in third place. Will the Lib Dems then be able to sway any vote on any topic towards their own policy and so be the most influential party?

I've seen a couple of posts asking why Nick Clegg isn't saying which party he would support in the event of a HP. But I thought they would "support" either Conservative or Labour at varying times depending on the policy being discussed?

In the case of a hung Parliament individual MP's, and the Lib Dems will become much more important.

From what I've read of Nick Clegg, Lib Dem support for any bill in a hung parliament will be on a bill by bill basis, which means that a lot of horse trading between parties and MP's will have to happen before a bill passes.

Personally, I'm hoping for a hung parliament at this point. If only because it's the only way PR will come to Westminster.

Thanks dizietsma