THE Liberal Democrats are the real rivals to Labour in the North with the Tories out of the race in the Hartlepool by-election, Charles Kennedy said yesterday.

In an upbeat speech to close his party's conference, the LibDem leader insisted his party was the only effective challenger in next week's crucial poll.

And that situation would be repeated in constituencies across the North at next year's General Election, because the Tories had "simply disappeared".

Mr Kennedy told delegates: "We are the challengers. The Conservatives have already conceded they aren't in the Hartlepool race.

"People know we've done it before and we can do it again in Hartlepool.

"If we go out there and make our case, make no mistake, we can do it."

He said: "In huge swathes of the country, it's the Conservatives who are now firmly established as the third party. In so much of the country, a vote for the Conservatives is a wasted vote."

In a 55-minute address, Mr Kennedy said recent by-election wins meant the LibDems had moved from being a party of protest to a party of power.

And, at the next election, the choice would be between "two essentially conservative parties and the real alternative, which is the Liberal Democrats".

But he accepted the public was still entitled to ask of his party: "Are these people up to it? Are those Liberal Democrats ready for the task in hand?"

Mr Kennedy insisted his party's watchwords of freedom, fairness and trust were in step with an increasingly liberal Britain.

The LibDems had "stood alone" in opposition to knee-jerk government policies that "pander to the lowest common dominator over asylum and immigration".

And the LibDems' own policies - scrapping tuition fees, 10,000 more police on the streets, cutting class sizes for the youngest children - were "providing the answers".

Mr Kennedy tried to counter Labour and Tory attacks that his "sums don't add up" by insisting his tax-and-spend proposals were "the most watertight yet".

And he condemned as a disgrace the fact that, after seven years of Labour, the poorest 20 per cent of people paid more of their income in tax than the richest 20 per cent.

In a long section on Iraq, Mr Kennedy came closer than ever before to labelling Tony Blair a liar over a war that had caused "shock and horror", not shock and awe.

He demanded Mr Blair come clean on evidence that he misled MPs when insisting Britain invaded Iraq because of weapons of mass destruction, not to force regime change.