The Scottish Liberal Democrats have ruled out a full-blown coalition with the SNP but left the door open to propping up John Swinney’s minority government.

Leader Alex Cole-Hamilton said he would engage on an ‘issue-by-issue’ basis with the Nationalists in order to promote Lib Dem priorities.

It followed the party improving its MSP count from four and claiming the scalp of children’s minister Maree Todd in Caithness, Sutherland and Ross.

The final tally was the Lib Dems’ best result since 2007, when the party won 16 MSPs.

However, the party also lost its Shetland stronghold to the SNP.

Mr Cole-Hamilton called it a ‘bitter pill’ but vowed to retake the constituency at the next Holyrood election.

John Swinney openly wooed the Lib Dems in the campaign, thanking them ‘warmly’ for backing the last two SNP budgets and suggesting they could work together on more in future.

With the First Minister again leading a minority government in need of another party to survive, Mr Cole-Hamilton said: ‘I’ve been clear from the start, and I stand by that, that there will be no coalition with the SNP.

‘I think for all the questions that Scotland currently faces, the answer to none of them is a third decade of SNP administration, and so we’re happy to rule that out. If [Swinney] gets to Bute House, then we will be prepared to be grown-up and work on an issue-by-issue, budget-by-budget basis.’

As well as defeating Ms Todd, the Lib Dems also picked up the new seat of Edinburgh Northern, where city councillor Sanne Dijkstra-Downie won by almost 2,500 over the SNP.

Mr Cole-Hamilton comfortably held his neighbouring Edinburgh North Western seat with a thumping majority of 13,016 over the SNP.

And newcomer Adam Harley took Strathkelvin and Bearsden from the SNP by 2,574 votes.

In the penultimate constituency declaration, the Lib Dems won Skye, Lochaber and Badenoch, an area once represented at Westminster by UK leader Charlie Kennedy.

The seat was held in the last parliament by Deputy First Minister Kate Forbes, who stepped down at the election to spend more time with her infant daughter. Andrew Baxter defeated Nationalist Eilidh Munro by 1,150 votes.

The Shetlands have been represented at Westminster and Holyrood by the Liberals and Liberal Democrats since 1950, when future Liberal leader Jo Grimond was elected the MP.

But former oil company geologist Hannah Mary Goodlad took the seat with 47 per cent of the vote, turning a Lib Dem majority of 806 into a SNP one of 1,517.

Mr Cole-Hamilton insisted his party would retake its traditional stronghold at the next Holyrood election and told its new MSP to make the most of the next five years.

He said: ‘Obviously, it is a bitter pill to have lost Shetland so narrowly. The Nats threw everything at it. I’m heartbroken for the team there.

‘But we’ll dust ourselves down.

‘I congratulate Hannah Mary Goodlad and I hope she savours the next five years, because they’ll be her only five years in the parliament.

‘But it’s been a great night for the Lib Dems. I think we’ve clearly seen a Liberal revival. We’re going to be a strong Liberal voice in the parliament to come.

‘We’ll be constructive where we can, but we will oppose where we need to.’ Mr Cole-Hamilton predicted the next five years at Holyrood could be ‘messy’ because of the upsurge in Green and Reform MSPs.

He said: ‘People obviously have been failed by the old established parties of government. They’re casting around for something different. They’ve picked candidates at this election that they will come to regret, I think.

‘I just don’t think that either Reform or the Greens represent serious politics.

‘In fact, in some cases, represent very dangerous politics, and it will be up to me and my group to ensure that we resist that and we bring measure and decency and credibility back to our parliament, where they would tear it up.’