'Lib Dems are the toughest party in politics': Leader Nick Clegg rouses faithful after election setbacks

The Deputy PM is struggling to sustain morale after dismal results in European and local polls last month

Nick Clegg will attempt to shore up the dwindling power of the Liberal Democrats tomorrow with a speech telling rival parties that he is "not interested in coalition at any cost".

The Deputy Prime Minister will launch the Lib Dems' campaign for next year's general election by announcing the first of his party's manifesto pledges. Mr Clegg will remind David Cameron and Ed Miliband that he will still be kingmaker next May if the nation votes for a hung parliament, warning that the Lib Dems are "the bravest and toughest party in British politics".

Yet Mr Clegg is struggling to sustain party morale after the dismal results in the European and local elections last month, which left them with just one MEP in Brussels and a loss of 310 local councillors.

Lib Dem fortunes continued to decline last week when they came sixth in the Newark by-election, behind an independent candidate and the Greens.

Mr Clegg has seen off a leadership challenge but acknowledged to his MPs at their weekly meeting last week that he needed to convey better to activists and voters what the Lib Dems wanted to do in government and map out a future for the party.

He will also remind voters of the Lib Dems' record in government, including raising the income tax threshold to £10,000, and the pupil premium.

The party found itself in another spat with Michael Gove yesterday, when the Education Secretary claimed credit for the pupil premium, which gives extra money to schools that take poor children. Mr Gove said in a speech to Policy Exchange that it was "an idea I championed before entering politics and which I am delighted to have delivered in government", and that "has ensured £6.25bn of additional money has been directed towards the poorest students in the country".

A Lib Dem spokesman pointed out that Mr Clegg had developed the policy more than a decade ago while an MEP, adding: "For someone who insists on historical accuracy, this is a rather amusing attempt to rewrite history."

In his speech in London tomorrow, Mr Clegg will say: "If there is one thing that has been brought home to me over recent weeks, it's that we need to be much clearer and louder about our reasons for wanting to govern … Our critics have spent four years claiming we've lost our soul – but it's simply not true.

"We mustn't allow our critics to rewrite history, airbrush out our role in this coalition or present us as some sort of electoral wedge … I am not interested in coalition at any cost – I am interested in Liberal Democrats in government to deliver a more liberal Britain."

A source close to Mr Clegg said: "The whole party have been asking ourselves some very important questions in the aftermath of the disappointing local and European election results.

"Nick feels that we were sent a message through the ballot box last month; we need to listen and be very clear with the voters both about what we've achieved in government, and our motives for being there."