Now my understanding has been that the governor general has this option but it is by no means a right of the opposition. And since the governor general has mostly (perhaps only unofficially) lost her authority to act in opposition to the advice of the current prime minister she doesn't even have that option. However, I did not dig too deeply into the details.
But then I heard this more precise claim by SFU professor Doug McArthur on CBC's BC early edition.
The only place where it is recognized the Governor General has any role is in whether or not, if the Prime Minister does not have the confidence of the house, whether or not to call an election or to go to the opposition parties and see if they could gain the support of the house. And the convention is that if you are in a period soon after an election -- the first month or two or three or four -- that if the Prime Minister comes and says I have not got the support of the house, I lost a vote of confidence [...] it is up to her to call the opposition. If it's later then that and they've been around for a while it's up to her call an election.So now I'm curious. What convention is he talking about? Are there any modern precedence to cite? (I feel that you can't really compare a 19th century governor general decision to a modern governor general decision since the autonomy is so different).
So certainly there have been coalitions before where no single member party of the coalition had a plurality of the seats, e.g. the Labour government in the UK in 1923 and the Liberal (King) government in Canada in 1925. But in these cases the coalition was formed before the new parliament was sworn in so the coalition never was the opposition.
The most recent relevant case I could think of would be the Harper-Layton-Duceppe letter to the governor general in 2004 where they hint that they could form some sort of pact rather than go to an election (they simply said they wished to discuss the GG's election alternatives with her). In this case the letter was received on September 9th, or two and a half months after the election. But since no non-confidence vote occurred until much later is difficult to say what actually would have happened.
To further confuse matters Mme. Clarkson wrote in her memoir that if the government had fallen in the first six months she would not have allowed an election. However, historians at the time of the memoir said that such an act would have been abnormal or even "bizarre." (This point comes from a 2006 review of the memoir in the Globe and Mail).
Then there is the King-Byng affair and the King government of 1925-1926. Here Lord Byng did allow the opposition to form a new government without an election but this was eight months after the election. Also, this was to give the government to the party with the plurality seats, not to a coalition (prior to the turn over King's Liberals had fewer seats than the conservatives but was supported by the Progressive party).
Perhaps what is more interesting is that this action set off a major turning point not just in the Canadian parliamentary system but in the parliamentary system of the whole Commonwealth. These changes involved Canada's relationship to England and the Governor General's relationship to parliament. In essence the system was changed so that it would be much less likely that such an action could occur again. In other words the fact that this action could happen was considered evidence of a broken system.
I certainly also need to bring up the 1976 dismissal of Australia's government elected in 1975. This case is fairly complicated because it involves both an elected senate and parliament so I'm somewhat fuzzy on the details. I'll just note that it doesn't seem to support McArthur's convention as it happened over a year after the election. Also, in this case the Governor General's actions of changing governments without an election raised a great deal of controversy and ended up being a regret of the throne.
But the precedent I find most interesting is the one that raised the least amount of noise and thus has the least amount written about it. In 1958, several months after a minority Conservative government had been elected (I am uncertain how many months but definitely less than eight) the then leader of the Liberal party stood up in commons and demanded that power be returned to the Liberal party. The Conservatives said no. If the Governor General was involved it was also to say no. Then the request faded away to be at most a footnote in history: much less than a instigation to change the way government works. The only indirect result of this request was that the Conservatives did ultimately call an election where they won 208 of 264 seats.
So best I can tell, when the Governor General does allow the opposition to take power without an election there is noise, controversy and eventually change so it cannot happen again. And when the Governor General does not give power to the opposition then history seems to just continue along. I guess I must have missed McArthur's convention.