While they failed to secure any significant increase on the 18 per cent of the vote received in 1993, the collapse in the Tory vote led to predictions of more than 60 MPs in the new parliament.
Paddy Ashdown held on to his own seat at Yeovil with a 3.1 per cent swing.
Accepting victory, he said: "I believe we will have a change of government with a substantial majority which will deliver a new era in our politics. More power will be in the hands of the voters and less in the hands of the Establishment. We shall use the votes we have been given tonight to make sure that in the next Parliament we continue to fight for the things we have fought for in this campaign."
The Lib-Dems made a spectacular gain at Torbay, unseating Rupert Allason after a recount. They also gained Aberdeenshire West and Kincardine. Among other wins for the party was Northavon, which was number 50 on its list of target seats.
As the 12th Liberal Democrat seat was declared, Mr Ashdown, said: "Out of all the parties we have gained the most out of this election. Labour have made an agreement with us for constitutional change. Mr Blair is an honourable man and I believe he will keep his promise in the next Parliament."
The party's first win of the night was Southport, where Ronnie Fearn unseated the Tory MP Matthew Banks. The news was greeted with huge cheers at the Liberal Democrats' temporary headquarters in a London pizza restaurant.
Southport was the party's 11th most winnable seat and required a swing of 2.8 per cent to win. Victory will be particularly sweet for Mr Fearn, who was MP for Southport from 1987 until 1992, having whittled away a Tory majority of 27,000 over four general elections.
One of the most remarkable results of the night for the party was its win in Northavon. Sir John Cope, the Tory MP for the seat, had represented the area since 1974.
The new MP for Northavon is Professor Steven Webb, a professional economist specialising in tax and the benefits system, who used to work for the highly-respected Institute of Fiscal Studies and had not stood for Parliament before.
The party also took Weston-super-Mare, turning a 5,400 Tory majority into a Liberal Democrat majority of 1,400.
But the Labour landslide led to the loss of Liz Lynne and Chris Davies in Rochdale and Oldham and Saddleworth respectively. Later, its candidate defeated Lady Olga Maitland in Sutton and Cheam. Labour overturned Mr Hughes's 7,000 majority in Southwark North and Bermondsey.