The Lib Dem leader was bidding to reassert his authority after a bruising week - and reach out to disaffected Labour voters thinking of voting Tory.

In his speech he urged voters not to sleepwalk into a Tory government and opt for "real change" instead.

The Lib Dems say their private polling shows the next election is "wide open".

Mr Clegg spoke without notes for just under 50 minutes - and his speech was greeted with a standing ovation from delegates in the Bournemouth centre, which included wife Miriam and former party leaders Lord Ashdown and Sir Menzies Campbell in the front row.

Labour 'dying'

The speech was also watched by a group of Gurkhas, who received a round of applause after Mr Clegg said he was "honoured" they could be present.

I want to be prime minister because I have spent half my lifetime imagining a better society Nick Clegg, Lib Dem leader As it happened: Clegg speech Send us your comments Analysis: Clegg's proposal to voters

Mr Clegg deliberately chose not to talk about what might happen in the event of a hung Parliament, focusing instead on what a Liberal Democrat government would do.

He stressed the party's commitment to fairer taxation and vowed to "clean up" Westminster politics including MPs' expenses.

And he said young people were his party's top priority - and proposed a 90 day job or training guarantee for the young unemployed, paid for by scrapping Labour's VAT cut.

He said: "Labour is dying on its feet. We are replacing them as the dominant force of progressive politics. We are the alternative to a hollow Conservative Party that offers just an illusion of change."

'Mansion tax'

He began the speech by hardening his line on Afghanistan - saying there was "one more chance to turn things around".

"I know some of you believe we should call for British troops to withdraw now," he told delegates.

"If things continue on the present disastrous course, then sooner or later that is a judgement which we may need to make."

But there was no mention of dropping a pledge to scrap university tuition fees from the next manifesto - a suggestion which sparked open warfare in the party at the start of the week.

He briefly mentioned Vince Cable's £1m "mansion tax" in a section on rebalancing the tax system so that the wealthy pay more.

The 0.5% levy on owners of £1m-plus homes sparked a backlash from some of the party's senior MPs earlier in the week, prompting an admission from the Treasury spokesman that he could have consulted more widely before announcing it.

'Progressive austerity'

Mr Clegg also addressed criticism from former leader Charles Kennedy, who said the party was in danger of losing its "heart" with Mr Clegg's talk of the need for "savage" spending cuts to tackle Britain's record debts.

Unlike Labour and the Tories, the Lib Dems had "come clean" about what cuts were needed and were guided by principles of "fairness", he said.

"Not just austerity, but progressive austerity. Reducing the deficit, yes, but also building a fair society and a green economy.

LIB DEM CONFERENCE TWEETS Twitter: @BBCLauraK That's it from Bournemouth - conference set being broken up at great speed! More from Labour in Brighton from Saturday #ldconf 14 minutes ago Some activists say Clegg 'exhilarating' -some unimpressed-leaving conference not clear what they'll be able to punt on the doorstep #ldconf 51 minutes ago Evan Harris,sometime Clegg critic,says speech was 'great not good' #ldconf About 1 hour ago Audience seem quite happy but loudest applause was for Iraq-more confident than last year-hugging gurkhas now About 1 hour ago Clegg's eldest son has already written to Santa-but not many goodies so far for activists in speech-they like tax plans though #ldconf About 1 hour ago What is this?

"Still driven by generosity of spirit, but fit for the circumstances of the day. It's the only way to deliver real change in Britain."

He spoke at length about what Britain would be like if the Lib Dems were in power, in what aides described beforehand as the most ambitious speech ever given by a leader of their party.

"I want to be prime minister because I have spent half my lifetime imagining a better society. And I want to spend the next half making it happen," he told the party faithful.

Mr Clegg ended by delivering a message to voters who do not usually vote Lib Dem or have given up voting altogether, telling them: "Don't stay at home, don't vote Conservative just because you think it's the only option."

He said: "If you supported Labour in 1997 because you wanted fairness, you wanted young people to flourish, you wanted political reform, you wanted the environment protected, or you simply believed in a better future, turn to the Liberal Democrats.

"I know there are people who agree with a lot of what we've got to say, but who still don't vote Liberal Democrat. You don't think we're contenders. I urge you to think again."

Mr Clegg's predecessor as party leader Sir Menzies Campbell hailed the speech as "an extremely impressive performance" which showed Mr Clegg was "ambitious for the party and the country".

He said the speech was "uncompromising" in spelling out the difficult decisions that needed to be taken and it showed Mr Clegg was "leading from the front". He compared Mr Clegg's call for change to US President Barack Obama's message.

But Conservative Party chairman Eric Pickles, giving his reaction to the speech, said:"Nick Clegg says he wants to be prime minister but I listened to his speech and still can't discover a reason for voters to choose him over David Cameron.

"After this muddled conference, it's now clearer than ever that if you want to get rid of Gordon Brown and his big brother state, and if you care about our schools, our quality of life and our liberties, you need to vote Conservative for a progressive, liberal government."

Liberal Democrat leader Nick Clegg has set out plans to "cut the cost of politics" by nearly £2bn.

His plans include closing 10 government departments and 90 quangos, axing spin doctors and no longer paying Opposition leader's wages out of the public purse.

Speaking on the second day of his party's conference, Mr Clegg said: "Central government in Whitehall is too big, too powerful and too expensive."

The £2bn savings would be enough to renovate 200 schools a year, he said.

Cutting the cost of politics is one of the key themes of Tory leader David Cameron who has said he would cut ministerial salaries and reduce the number of MPs, as well as slashing quangos.

Labour has also vowed to squeeze Whitehall spending.

Mr Clegg is using what will be his party's final conference before a general election to emphasise the need for what he has called "savage" public spending cuts - although he toned this down to "serious" cuts in a speech to party activists on Saturday evening.

Spin doctors

He risked the wrath of his party's left wing in the speech by saying he may be forced to drop its long-standing commitment to free university tuition.

But his proposals to cut the cost of politics are likely to go down better with the party faithful.

Mr Clegg says he would freeze ministers' salaries and cut the number of them on the government payroll from more than 100 to 73.

He would also halve the number of departmental spin doctors.

He told BBC News: "We could save billions by scrapping entire government departments and culling quangos.

"Doing politics differently and saving money means dismantling Labour's spin machine by halving the number of government press officers and making political parties pay for their own special advisers.

"The nearly £2bn savings in our proposals could be invested in public services and would be enough to renovate 200 schools every year."

Pay cap

The Liberal Democrats went into the 2005 election promising to close eight government departments, including what was then the Department of Trade and Industry, but the latest proposals go slightly further.

Mr Clegg says he wants to cut the number of government departments from 24 to 14.

He also published a list of quangos he wants to see culled.

These include regional development agencies - a long-standing policy commitment - but also less well-known bodies such as the School Food Trust, Teachers TV, the Independent Advisory Group on Teenage Pregnancy, the Civil Nuclear Constabulary and the Covent Garden Market Authority.

The document also proposes a reduction in the budget of the Serious and Organised Crime Agency.

Health spokesman Norman Lamb will also call for quango chiefs' pay to be capped at the same rate as the prime minister's.

In a keynote conference speech he will promise to cut the size of the Department of Health by half and to scrap strategic health authorities.

The party says it would save £500m by reducing health quangos.

Mr Lamb will claim health quangos alone now cost around £1.2bn a year and employ 25,000 people - and that 24 of their chief executives are paid more than Gordon Brown.

Mr Lamb wants to give ward sisters more control over their budgets and greater responsibility for the staff who work with them.

He will also propose recruiting 3,000 more midwives and health visitors to tackle the current shortfall.

Caroline Lucas is aiming to become the Green's first MP

Green Party leader Caroline Lucas has accused the government of a "political crime" in failing to properly address the issues of climate change.

At her party's conference in Brighton, she said plans to expand Heathrow Airport and for a new generation of coal-fired power stations must end.

She also called for reform of party funding, the voting system and of the House of Lords.

Ms Lucas, one of two British Green MEPs, hopes to become a Westminster MP.

She will stand in the Brighton Pavilion constituency at the general election - where the Greens took 22% of the vote in 2005.

'Politics with passion'

The party was "up to the task" of the "formidable challenges" it faced to get its first MPs at the election - expected next spring - she said in her speech.

It could offer an agenda-setting "politics with a passion", she said and voters had a choice between continuing with "growing inequality and cynicism as drift towards environmental catastrophe" which offered a "politics built on fairness".

Our government's inaction is nothing less than a political crime Caroline Lucas Green Party

The Greens have 123 councillors and two London Assembly members and gained 8.7% of the vote in Britain in June's European elections, up from 6.2% in 2004.

The party says the fact it polled 1.3m votes in the June election shows it can win support, even during a recession when environmental issues can slip down the political agenda.

In her speech she said the "current level of ambition" on tackling climate change would not deliver the scale of emission cuts needed, nor sufficient financial resources to help poorer countries adjust.

She called for "an end to airport expansion, to plans for a fleet of new coal-fired power stations".

"We demand massive investment in energy efficiency, renewable energies, public transport, green jobs.

"And we demand that when the government signs up to new emissions targets, that they are honest about it, that they undertake domestic cuts here at home, not try to outsource it or offset it in poorer countries."

She praised grassroots protests but said that had to be matched by political leadership.

The mainstream parties "pretended that they have the problem under control" through measures like low energy light bulbs and loft insulation, she said but actually thought major change would involve too much "sacrifice".

But she argued that moving to a "post-carbon world" could create jobs, an equal society and a way of life "with the potential to be far more fulfilling than the turbo-charged consumerism which is being peddled by other politicians today."

"That's why we say our government's inaction is nothing less than a political crime."

Ms Lucas also said the Greens had warned of the "lethal cocktail" of liberalisation and deregulation before the recession and had "sounded the alarm" about the housing market, privatisation of health and education and about hedge funds.

All army personnel were awarded a 2.8% increase this year

The junior ranks of the armed forces should get an immediate £6,000 pay rise to help boost morale, the Lib Dems say.

It was "shameful" that many privates on their first tour of duty earned less than police constables and junior firefighters, leader Nick Clegg said.

He said the move, costing about £300m, could be part funded by cutting 10,000 "desk" jobs at the Ministry of Defence.

Ministers said pay deals for the armed forces had been among the best in the public sector in the past three years.

All military personnel were awarded a 2.8% pay rise earlier this year after the government accepted the recommendations of the Armed Forces Pay Review Body.

As a result, the basic pay of a private on operations rose to between £16,681 and £25,887.

'Dissatisfaction'

But opposition parties have continued to press for higher pay and better accommodation to reflect the armed forces continuous involvement in conflicts in Iraq and Afghanistan since 2003.

The Lib Dems said there was "widespread dissatisfaction" about pay levels among the lowest ranks at a time when young men and women were being asked daily to put their lives on the line.

We can't continue to reward the bravery of lions with peanuts Nick Clegg, Lib Dem leader

They are proposing a £6,000 increase in basic pay for entry-level privates in the Army and their equivalents in the other services.

This, they claim, would lift the annual salary of the lowest-paid privates from £16,681 to £22,680.

They are also calling for longer-serving privates and lance corporals to get a £3,000 rise, which would take their average annual pay up to about £25,000.

Corporals, sergeants and higher NCO ranks should get a £1,000 increase, equivalent to an extra £20 a week.

Mr Clegg said poor pay levels were having a "dreadful impact" on morale in the armed forces.

Job savings

"Nobody can put a price on the sacrifices our troops make on our behalf but it is clear to everyone that pay levels are shamefully low for the lower ranks," he said.

"We can't continue to reward the bravery of lions with peanuts. The Liberal Democrats will ensure that no soldier, sailor or airman goes into harm's way on less basic pay than a new recruit to the police or fire service."

The salary increases can be paid for from within the Ministry of Defence's existing budget, the party argues.

The estimated £300m required to fund the move should come from savings at the MoD, primarily from job cuts.

The Lib Dems said it was "ridiculous" that the MoD employed two "desk-based" employees for every one serving member of personnel and the department could make do with 10,000 fewer civilian employees it deems "non-essential".