Mr Clegg urged voters to "try something new" and back the Lib Dems on May 6 in order to "change our country for good".
He said his party's manifesto, which included pledges to cut taxes for low and middle-income earners, represented "hope married to credibility" and put "optimism in touch with reality".
The manifesto was built around one word - fairness - and its "four steps to a fairer Britain" were fair taxes, a fair chance for every child, a fair future and a fair deal, Mr Clegg said.
He accused Labour and the Tories of "conspiring to airbrush the recession out of the election" and said he was the only party leader who could be honest with the country about measures needed to restore the health of public finances.
The Lib Dems are promising a £700 tax boost for millions of taxpayers by raising the National Insurance threshold to £10,000.
Costing £17 billion, it would be paid for by raising Capital Gains Tax, cutting pensions relief for high earners, increasing aviation taxes and by a "mansion tax" on properties worth more than £2 million.
The party is also promising economic reform, a £2.5 billion pupil premium for the poorest children and sweeping constitutional change including a new electoral system.
It pledged to boost the pay of the lowest ranking members of the Armed Forces to bring them into line with the starting salary of their emergency services counterparts.
But child trust finds, tax credits and winter fuel payments to pensioners would all be reduced. There would be a cash limit of £400 on public sector pay rises for two years. Money would also be saved by scrapping regional development agencies and Homebuy schemes for first-time buyers.
Launching the document in the City of London, Mr Clegg said: "I believe that every single person is extraordinary.
"But the tragedy is that we have a society where too many people never get to fulfil that extraordinary potential.
"My view, the liberal view, is that government's job is to help them do it."
He said the way to achieve that was to "take power away from those who hoard it, to challenge vested interests, to break down privilege, to clear out the bottlenecks in our society that block opportunity".
Mr Clegg said the promises, including the pledge to raise the income tax threshold, were fully funded, with the figures included in the manifesto.
At the launch, Treasury spokesman Vince Cable warned that Britain's deficit was the "elephant in the room" which had been banished by Labour and the Tories.
He added: "We don't think you can banish it, you have to confront it - and I guess I'm the elephant man."
Mr Clegg continued: "It's because we are being straightforward about those tax rises that you can put trust in our tax cuts."
Outlining the principles behind the manifesto, he said: "I simply don't believe it is fair that, in Britain today, a child's chances in life are determined more by their parents' bank balance than by their own hopes and dreams."
The party's £2.5 billion pupil premium would direct more money to poorer children's schools.
The plans to reform the banks, including restrictions on bonuses, would mean "no longer will you have to look at the banks and despair at the greed and excess".
Breaking up the banks, splitting the investment and high street divisions, would mean savings will "never again be used as stakes in a game of Russian roulette on the international money markets".
Promising to reform the "rotten" political system in Westminster, he said the electoral system would change so that "every voter's choice matters".
MPs who avoided capital gains tax and "flipped" their taxpayer-funded homes would be "finally brought to book".
The Lib Dems offered "promises you can trust - together they can change our country for good".
Mr Clegg said: "The two other parties, they are conspiring to airbrush the recession out of this election.
"Labour, so we don't blame them for the damage they have done, the Conservatives, so they don't have to come clean about the cuts and the tax rises they're planning.
"They are treating people like fools, imagining that manifestos barely fit for a time of plenty are good enough for a time when money is tight.
"Our manifesto recognises the world has changed. There isn't spare money to splash around, we can no longer rely on the City to pay our bills.
"People have got to be levelled with. It is wrong to promise something for nothing.
"It is only because we are willing to make difficult decisions, to find cuts in some areas, that we can make the commitments in this manifesto in other areas."
Mr Clegg went on: "This is hope married to credibility, it is optimism in touch with reality.
"It is what makes our manifesto different. And through it, page by page, you will see we retain our commitment on the environment, with policies to make our lives, our jobs and our communities in every chapter."
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