Steve Richards: Is it possible to be in power and also stick to your principles?

Nick Clegg: Told GQ he'd slept with 'less than 30' women. Regretted it as soon as the sobriquet 'Cleggover' was born (AP)

A minor confession. I am one of the few journalists who have attended every annual conference of the Liberal Democrats since the party's formation, a claim that not even some of its former leaders can make. In each of them I have observed intense, open debates. The party is famously democratic, almost to the point where it is impossible to lead. And yet I cannot recall debates that explored and challenged deeply held assumptions on big, broad themes such as their robust support for civil liberties or their attachment to vaguely defined localism. Instead the conference hall gets admirably heated over specific policy stances. This is a party that tends to have around 10,000 policy stances at any given time so the debates move on speedily.

Of course there were also the famous, or reasonably famous, internal discussions between "Orange Book" Liberals and social democrats, an important divide that has assumed greater significance lately. But all were united over the party's most distinctive stands, ones that had been untested, until the last general election, by the demands of national power.

Others have been more introspective. The former Labour Home Secretary, Charles Clarke, once wrote a thoughtful article about the dilemmas of being a liberal in government when faced with the threat of terrorism. Clarke regarded himself as a liberal Home Secretary and yet supported most of the highly contentious anti-terrorist measures instigated by Tony Blair that so alarmed and alienated many liberals. His article was stimulating because, although Clarke was too loyally supportive of some measures, he is indeed a liberal by instinct and sought to question policy-making more deeply than some of his more supine colleagues.

Now it is the turn of the Liberal Democrats to reflect on what it means to be a liberal in power. Governing brings awkward dilemmas. This week the Government published a report from David Anderson QC, the independent reviewer of anti-terrorist measures. The report focused on control orders, which were introduced after the London bombings in 2005. After a lot of pressure from senior Liberal Democrats, the Coalition replaced the orders with so-called TPIMs (terrorism prevention and investigation measures) soon after the last election. Good riddance they thought, and I thought too.

This week's review received little coverage compared with the furore when the control orders were first proposed. Yet the sequence, from their introduction to abolition and on to the conclusions of the review, highlights the complexities of this most sensitive, nuanced policy area.

Tony Blair and then Gordon Brown at times used the threat of terrorism partly for crude political purposes, knowing that a "tough" stance would be popular with voters and some newspapers, especially those owned by Rupert Murdoch. Blair's support for extending the period in which suspects could be held without charge to 90 days was both an act of opportunism and a reluctance to question demands from senior intelligence officers and the police. Famously Blair was defeated in the Commons over the issue, but Brown thought he would have another go on a reduced deadline of 45 days.

Once more, the opportunistic move was doomed thanks to the strong opposition of the Conservatives and the Lib Dems, both taking principled stands and in the case of the Tory leadership, a risky one. Blair also lapsed into breathtaking populism when just before he left for his summer holidays in 2005 he announced a "10-point plan" to address the terrorist threat.

Charles Clarke, who was Home Secretary at the time, was already on holiday in the US when the sudden plan was unveiled, as if from nowhere. Most of the points were never implemented. Again the opposition of the Conservatives and Liberal Democrats made a mark.

Populist politics led to some misjudged authoritarianism. But facing the possibility of terrorist attacks is more frightening as a Prime Minister and a Home Secretary than it is from the relative luxury of opposition.

In the case of control orders, this week's review concludes that they "fulfilled their primary foundation of disrupting terrorist activity", that they were "enforceable" and that there was no evidence they were counter-productive. The measures were tough, including a curfew of up to 16 hours a day, confinement within a geographical boundary, tagging and restrictions on communication. Nonetheless, the review concludes that the orders were applied with a "substantial degree of fairness".

It reaches a different judgement on the seemingly more humane replacement: "These changes were motivated by civil liberties concerns. They are unlikely to further the requirements of national security – rather the reverse." To counter the increased risk, higher spending is required now on additional "covert investigative techniques".

When the Coalition announced it was scrapping control orders, I phoned Clarke, and asked whether he still supported their retention. Out of power and without too much of an axe to grind, he insisted that he did. Partial vindication comes in the form of the independent review.

At some point the Lib Dems are bound to renew more openly a theological debate between their left and right. It will go around in familiar circles. But there is also scope for a more nuanced discussion about the balance between civil liberties and security in the light of experience in government. Internal questions need also to be posed about the limits of "localism", which led some senior members to back the original NHS Bill.

This is not to argue the Lib Dems should ditch two of their more attractive and distinctive stands, support for civil liberties and an attachment to localism. In these areas they make an impact. But as we saw in France last week, a government must answer questions about how an Islamist had the space to strike. Charles Clarke is not alone in wondering what it means to be a liberal when terrorists can take away the freedom to live.