Nick Clegg wants to reposition the Liberal Democrats from being a party of protest to becoming the voice of Middle England, as he reaches out to a new type of voter ahead of "difficult" local elections in May.
In a move to define Lib Dem ideology in government, Mr Clegg said the party should "own the freehold to the centre ground of British politics".
Aides said Mr Clegg realised that his party's message in coalition had been unfocused and that the Lib Dems had failed to state clearly "who they stood for".
Mr Clegg said the party was "on the side of everyone who wants to get up and get on" and reprised his slogan of "alarm clock Britain". "These are the people Liberals have always fought for," he said. "People who have to work hard to make ends meet. People who need good schools, who rely on the NHS."
The Lib Dems finished sixth in the recent Barnsley Central by-election, behind Labour, the UK Independence Party, the Conservatives, the BNP and an independent candidate.
In an acknowledgement of the problems the party has faced in government, Mr Clegg said they had been forced to take "painful decisions". But, he added: "Clinging to the comfort blanket of opposition would not have made life more comfortable for our fellow citizens."
The speech was seen in advance by David Cameron.
Mr Clegg suffered some embarrassment whenactivists passed an emergency motion criticising the "Project Merlin" deal which the Government struck with banks to restrain bonuses and boost lending. Overall, officials believe the Sheffield conference has not been as bad for the party as feared. Its travails have been overshadowed by events in Japan, and the protests were smaller than predicted.
Activists leaving Sheffield City Hall said that while they expected May's elections to be "difficult", they were heartened by the leadership's efforts to talk up their achievements in government. "Until this weekend, I felt we had a hodge-podge of policies in government but with no real story to tell," said Matthew Folker, from Newcastle, where the party is defending control of the city council. "But now I think we're beginning to get a message across."
A lone protestor offered a parody of David Steel's much derided conference proclamation of 1983: "Go back to your constituencies and prepare for oblivion."
Nick Clegg lives to fight another day
Leading article, Viewspaper, page 2
He knows he can't stay quiet about his little victories forever
Mary Ann Sieghart, Viewspaper, page 5