Calculations of the absorption coefficients for inverse bremsstrahlung in the field of ions and neutral atoms in ground and excited states and for photoionization are presented for the absorption of He&sngbnd;Ne laser radiation in dense Li plasmas. These are compared with those measured in an exploded Li‐wire plasma and the two values differ at most by a factor of five. The electron density and temperature in the plasma are estimated from the time‐resolved spectroscopic measurements using the Stark broadening of the Li 6103 line and the intensity ratios of various neutral and ionized Li lines. The plasma diameter and the total neutral atom densities are estimated from the framing and streak pictures of the plasma.