I'm in charge, Kennedy tells Lib Dems

At the end of an annual conference which has witnessed rumblings of discontent about Mr Kennedy's leadership style, he used his keynote address to spell out his personal vision of liberalism.

And he reassured activists concerned that he is planning to shift the party to the right, saying: "I did not enter public life with the ambition of leading yet another conservative party in British politics."

The week-long gathering in Blackpool has been dominated by tussles between a rising group of "modernising" MPs who want the Lib Dems to shed their high-tax, high-spending image and grassroots activists who suspect them of wanting to dump the party's progressive traditions.

Two key "modernising" motions backed by Mr Kennedy on part-privatisation of the Royal Mail and capping EU spending were rebuffed by members.

And one of the leading figures on the left of the party, president Simon Hughes, was forced to state publicly that he was not planning a leadership coup.

Today, Mr Kennedy dismissed the labels of right and left as "out of date and out of time", insisting that the true divide in British politics today was between conservatives and liberals.

Labour and the Tories were "two essentially conservative parties", while the liberal tradition was "the growing force in politics", he said.

"When this Labour Government fails - which one day it surely will - the party that is ready for the challenge of government will be ours," he said.

"I will lead this party into the next election as the clear alternative to a discredited Labour Government. It's my ambition to lead the first government in the liberal tradition of the 21st century."

Mr Kennedy spelt out the fundamental principles behind the liberal philosophy as the championing of the individual and communities, defence of human rights and civil liberties, fairness, social justice and environmentalism.

And he took a side-swipe at critics within the party who accuse him of steering the Lib Dems away from their historic values by insisting: "There is absolutely no contradiction between economic liberalism and financial discipline on the one hand and fairness and social justice on the other."

Totemic leaders from liberal history like Asquith and Lloyd George would have found their argument "utterly ludicrous".

The controversial policy motions on the EU and Royal Mail were "not left, not right, but liberal".

In a biting critique of Labour's handling of Iraq and terror, Mr Kennedy made clear that he believes that the response to the July 7 bombings in London will be a dominant issue of the current Parliament.

The "war on terror" declared by Tony Blair and US President George Bush has been "so badly implemented that it has actually boosted the terror threat not diminished it", he said.

Accusing Mr Blair of being "in denial" over the scale and nature of problems in Iraq, he demanded a clear exit strategy to bring UK troops home.

And he put the Government on notice that the Lib Dems will not accept counter-terrorism measures such as detention without charge for three months - which "undermine our most basic rights and eat into our most cherished freedoms".

In an unusually personal speech, Mr Kennedy spoke of his experience growing up in the Scottish Highlands and his hopes that his son Donald - born earlier this year - will be able to grow up in a country whose environment is unspoilt.

And he insisted that he was still "driven" by the same passions for fairness, decency and tolerance that prompted him to enter politics 25 years ago.

Following a General Election in which Labour won a 66-seat majority with just 35% of the popular vote, Mr Kennedy made clear that he is ready to return to the attack on voting reform, telling delegates: "This argument just won't go away, and we're not going to let it go away."

The Prime Minister "may have a working majority but he cannot claim any moral mandate" after winning power with the support of just one in five of registered voters, he said.

And he argued that the British people had a right to feel "cheated" by the election result, drawing a comparison between Mr Blair's efforts to bring democracy to Iraq and his refusal to consider fairer voting methods in the UK.

"Even with the odds stacked against us, the truth is at this election, Labour became just as worried about the Liberal Democrats as they ever were about the Tories," he told delegates.

"And in that, they were undoubtedly correct. We represent a change to the status quo. An end to their comfortable two-party system. We threaten directly their arrogance in power.

"And I say to all those who held their nose last May and voted Labour without conviction don't get fooled again."

Mr Kennedy angrily hit out at "others" in the Liberal Democrats who thought they had "better ideas" about running the party.

In an unscripted addition to his rallying end of conference speech, Mr Kennedy defiantly insisted he would continue leading the party in a "sensible, genuine and mature" way.

And to loud applause he promised to listen and take stock after the party's improved showing in the May election.

Acknowledging there had been a lot of talk about leadership at the gathering, he said: "For me what constitutes good leadership consists first and foremost of getting the big decisions correct - however controversial, however difficult, however potentially divisive.

"When you get them correct, then you've got to take people with you. Wise leadership also knows when it's the right time to listen as well.

"Now, four short months after leading our cause into its best general election outcome in over 80 years strikes me as a sensible time for the leader to take stock and listen to you and then to consult and to come back to you with the correct conclusions.

"And once they are in place to enable our party to continue its upward movement in unity. That is how I have sought to lead our party over these past six years and that is how I intend to continue to lead our party into the future.

"Others may have become so full of themselves that they think they are full of better ideas about leadership. But take it, based on experience, that what I've set out is the sensible, genuine and mature way to lead a political party.

"With your support that's what I intend to continue doing."