I) -individualism is the belief in the supreme importance of the individual over any social group or collective body. For classic liberals, this is heavily associated with attempts to contract or minimise the state with a view to widen individual freedom and strengthen individual responsibility.
-modern liberalism, aka '20th c lib' is a branch of liberal theory that emerged as a response to the spread of poverty ignorance and disease in the post-industrial era, stressing the importance of egoistical individualism, negative freedom, enabling state and economic management.
-due to such developments, classic liberals have accused modern liberals of abandoning individualism and embracing collectivism, which is the belief that collective human endeavour is of greater moral & practical value to individual self striving and that human beings have a social core. Collectivism is commonly associated with pushing the state forward, as the state is a mechanism through which collective energies are harnessed and collective ends achieved.
A) -Modern liberalism have been accused of embracing collectivism because of the extent to which which they are prepared to support government intervention in social/economic affairs via an 'enabling/interventionist state'. Classic liberals understand freedom in negative terms, believing the absence of external legal/physical constraints as a condition for autonomy, but recognise that some authority is needed via a neutral arbiter amongst egoistical individuals. These were based on the ideas of Locke, who proclaimed the government should defend 'natural rights' and so the realm of the government should not exceed three responsibilities: maintaining public order & protecting property/providing against against external attack/ensuring contract is enforced.
-Conversely, modern liberals endorse social liberalism/welfarism, in which the state takes primary responsibility in the social welfare of its citizens such as through services related to health and education. Clearly this is a breach of the minimal functioned "night watchman" state (Locke) classic liberals are prepared to endorse, hence leading to their accusations that modern liberals have abandoned individualism and created the risk of engendering dependency and sapping initiative.
-Secondly, modern liberals have been accused of embracing collectivism for endorsing economic management through Keynesian fiscal policy, where they believe governments can manage their economies through influencing 'aggregate demand'. Spending, in this sense, is seen as an injection into the economy whereas taxation is a withdrawal because it reduces aggregate demand and dampens down economic activity. Classic liberals are critical of this because influenced by the works of Adam Smith, they believe that prosperity is achieved via 'invisible hand' and a 'laissez faire' free market economy in turn promotes freedom of choice and material consumption amongst utility maximising egoistical individuals. They thus accuse modern liberals of abandoning individualism and embracing collectivism, because Keynesian policies disrupt the 'natural' balance amongst competing interests via a self-regulating economy and instead impose regulations that inhibit economic freedom.

-However modern liberals stress that their ideas are still rooted individualism, as for example, a belief in interventionist state is still based on a core belief in freedom. Modern liberals simply have a different idea of what freedom actually constitutes, with TH Green conceptualising a positive notion of freedom that recognises self mastery as a condition for self autonomy. Self mastery, or liberty in this case, is not simply threatened by external legal/political constraints, but also social conditions, e.g. poverty/degradation endangers freedom by limiting choice. Therefore modern liberals believe that interventionist state is significant for human freedom in this sense by keeping crippling social evils at bay.
-Secondly, modern liberals believe an an active government that encourages distribution and stimulates welfare can enlarge freedom, because government cannot coerce its citizens to do good but it can cultivate the conditions for individuals to self-develop and make moral decisions, which is what is equated to freedom according to modern liberal theorists such as TH Green. Clearly though the balance between the state and the individual has altered, a commitment to the needs and interests of the individual remain, and so modern liberals have not abandoned individualism.
In addition, welfarism is in the interests of the individual because it aims to aid human flourishing by creating 'equal life chances' from removing the social disadvantages that unfairly blight some groups in society. The expanded welfare state in the UK for example was based on the Beveridge Report, which set out to attack the 'five giants' - ill, want, squalor, idleness and disease. Hence such ideas are rooted in individualism as they are based on assumptions about egoism and self interest rather than a belief in social solidarity. Furthermore, although mod libs have expanded the responsibilities of government through welfarism, it does not extend social and economic intervention and is therefore restricted in the interests of individualism, reinforcing the notion that modern liberals have not embraced collectivism.
-Finally, the modern liberal belief in economic management through Keynesian policies is in tune with individualism, because fiscal policy ensures a natural rate of employment. Modern liberals believe a high rate of employment is necessary for the needs of the individual, in particular the lower class, because it promotes the social conditions in which individuals can flourish and achieve self realisation. Modern liberals still hold faith in capitalism but simply differ to classic liberals on how 'free' the market should be so as to make it attentive to individual needs and interests as possible.
Conclusion) In conclusion, modern liberals have not abandoned individualism and embraced collectivism, because they do not possess an intention to establish a nanny state but are committed to creating an environment where individuals can flourish. This is because classic liberalism has simply given rise to new forms of inequality and injustice to develop through unrestrained pursuit of profit, hence the modern liberals have simply updated the doctrine solely in the interests of individualism.