In a new year message to his party, Mr Ashdown said there was a growing disillusionment with British politics, amid a sense of public anger and hopelessness as the country was driven to despair by the recession.
'We in Britain are governed by people and institutions who have grown complacent with power, out of touch with realities in their country, out of date with the modern world.'
British politics, he said, 'isn't working'. The Government had abandoned many of the policies on which it fought the general election, replacing them with 'drift, error and incoherence', while Labour had failed to accept the need for reform.
The problem lay not just with politicians but with the failed system of politics itself 'and in the antiquated institutions which run our country'. He said the coming year 'must be the year when politicians stop ducking all the awkward questions, and when we face up to the need to reform our ineffective, centralised and secretive system of government'.
Government was providing too little leadership where it was needed and too much interference where it was unnecessary.
Mr Ashdown's message plays on themes that John Smith plans to highlight in the new year, with the Labour leader planning a speech calling for large-scale constitutional reform through devolution and more open government. Mr Ashdown also emphasised the need for welfare reform as Labour is examining that through its Commission on Social Justice.
The task for the Nineties, Mr Ashdown said, was to create opportunities for all. 'To reform social welfare so that it is a route to freedom, not a tramline to dependency. To look again at the role of taxation so that it creates opportunities for achievement, not disincentives to success. To build a system of education and training that is the envy of the world.' The real division in Britain was 'between those who want to modernise our country and those who want to keep it stuck as it is'.