Representatives defeated by 308 votes to 299 an amendment that would have committed the party to "oppose any plans to expand the grammar school system", while leaving it to each LEA to decide on the future of existing grammar schools.
Instead, a motion was passed opposing "Conservative plans for the wholesale expansion of grammar schools" and leaving it to each LEA "to assess the impact of grammar schools in their area and to act accordingly".
The vote came as a relief to Liberal Democrat leaders, who opposed selection but are anxious to safeguard the party's principle of local decision-making. But it revealed the party's deep division on selection.
Patrick Short, who chairs the party's education policy working group, said he would campaign against selection, but "defend to the end" the right of locally-elected representatives to make the decision.
But Stephanie Bailey, from Yeovil, pointed out that the party was happy to be prescriptive in other areas, such as returning grant-maintained schools to local authority control. "We can't afford fence-sitting any more," she said. "We should stand up and state unequivocally we will not allow any more grammar schools."
After the vote on grammar schools, the conference voted overwhelmingly to approve the party's Pounds 2 billion education package, to be paid for "if necessary" by an extra penny on the rate of income tax.
Representatives voiced loud support for scrapping nursery vouchers and letting teachers decide how to teach.
Don Foster, the party's education spokesman, opened the debate with a boisterous speech in which he made fun of Labour for not daring to promise more money for education. "Only the Liberal Democrats," he said, "have the courage to offer policies that will reach parts of the education system the other parties daren't reach."