Former VP candidate mocks President Obama in address to populist group that unites much of US rightwing

The US is "ready for another revolution", Sarah Palin told conservative activists last night in a keynote speech to the first national tea party convention in Nashville which also roundly condemned Barack Obama.

"This movement is about the people," the 2008 Republican vice-presidential nominee said last night to cheers. "Government is supposed to be working for the people."

Mocking Obama's 2008 campaign slogan, Palin noted Democrats' state electoral losses since Obama took office a year ago with talk of hope and promises of change, asking: "How's that hopey, changey stuff workin' out for you?"

Her audience waved flags and gave a series of standing ovations as Palin addressed the tea party gathering, an anti-establishment, grassroots network motivated by anger over the growth of government, public spending and Obama's policies.

The convention opened on Thursday night with a controversial speech by Tom Tancredo, a former Republican congressman who ran for president in 2008. Focusing mainly on illegal immigration, he invoked segregationist ideas by saying Obama had been elected because "we do not have a civics, literacy test before people can vote in this country".

Palin's address was less incendiary overall. Peppered with her trademark folksy jokes, it amounted to a 45-minute pep talk for the coalition and promotion of its principles. But, aside from broad conservative principles like lower taxes and a strong national defence, it was short on policy ideas that might indicate serious plans to run for the White House.

Palin talked of limited government, strict adherence to the constitution, and the "God-given right" of freedom. She said the "fresh, young and fragile" movement was the future of American politics and "a ground-up call to action" to both major political parties to change how they do business. "You've got both party machines running scared," she said.

Palin suggested that the party should remain leaderless and cautioned against allowing the movement to be defined by any one person. "This is about the people" and "it's a lot bigger than any charismatic guy with a teleprompter," she said, a dig at Obama.

The former Alaska governor, who resigned from office last summer before completing her first term, didn't indicate whether her political future would extend beyond cable news punditry and paid speeches to an actual presidential candidacy.

All she offered was a smile when a moderator asking her questions used the phrase "President Palin." That prompted most in the audience to stand up and chant: "Run, Sarah, run!"

Palin said she would not keep her $100,000 (£64,000) fee for speaking at the event, and would return it to "the cause".

Activists paid £350 to attend the entire three-day gathering, or £225 just to hear Palin's speech after a dinner of lobster and steak at the sprawling Gaylord hotel. The cost led to criticism from some activists that it runs counter to the coalition's image and could preclude people from attending.