As their annual conference in Bournemouth begins today, the Liberal Democrats sense that they are in the game, but worry, in their private moments, that they are not doing better when Labour is playing so badly.

It was precisely to head off that awkward question that Nick Clegg restated his audacious goal of replacing Labour in a pamphlet published by the think-tank Demos this week. He raised the intriguing prospect of a historic role reversal: just as Labour, recognising the need for collectivist solutions, overtook the exhausted Liberals in the early 20th century, the Liberal Democrats, knowing the top-down state is past its sell-by date, can now eclipse a "clapped out" Labour Party.

It sounds fanciful. It is not going to happen at next spring's election. Tory strategists do not believe Labour's 26 per cent average poll rating and suspect the Labour core vote will still be around 32 per cent.

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Mr Clegg has been careful to set a timescale of two elections for his other, more realistic, aim: doubling the number of Liberal Democrat MPs (currently 63). To supplant Labour, he probably needs it to implode after an election defeat, possibly even to split.

That is not impossible. Labour has no divine right to be one of the big two parties. A crushing defeat could see it take a left turn. Moderates might switch to the Liberal Democrats, turning their backs on a socialist/trade union party. More likely is that Labour would remain centrist and make common cause with the Liberal Democrats against what could quickly become an unpopular Tory government. Policy differences between Labour and the Liberal Democrats are much smaller than both parties will have us believe from now on. Which is why sensible Tories fear a Lib-Lab deal in a hung parliament and want to push on above their 41 per cent rating.

The Liberal Democrats should be doing better. They did poorly in the European elections in June, gaining half the 28 per cent they won in the local elections on the same day. They need the shot in the arm of a by-election win but it hasn't happened.

Arguably, they deserve to be doing better. The media, taking its cue from our first-past-the-post system, portrays politics as a two-horse race, a huge and unfair handicap for a third party which has been ahead of the curve on Iraq, identity cards, Trident, the debt bubble, Northern Rock, bankers' bonuses, public spending cuts and now Afghanistan.

Vince Cable, the party's impressive Treasury spokesman, has identified £14bn of savings towards his demand for £80-100bn of cuts, and is being more honest than his Labour and Tory counterparts. He acknowledges the need for the post-recession tax rises that every politician knows must accompany spending cuts. Labour's 50p top rate from next April is largely symbolic and won't fill Treasury coffers. The Tories, for all their tough talk about spending cuts, are still committed to tax reductions for married couples and on inheritance.

Addressing a rally in Bournemouth tonight, Mr Clegg will turn his fire on the Tories, branding David Cameron the "conman of British politics", who tells people what they want to hear and offers "fake change, not real change, phoney politics, not new politics". He will ridicule Tory claims to be the real progressives of British politics. "The clue is in the name," he will say.

Fair point. But why, then, is the "liberal" brand not more popular? The question occurs again. I asked branding expert Robert Bean, the man behind BT's "It's good to talk" campaign and a former adviser to the Liberal Democrats. He recalls his work for Charles Kennedy in a book, Winning in Your Own Way, The Nine and a Half Golden Rules of Branding, published next week.

He told me: "The perception of the Lib Dem brand? Faded orange bird logo? Bit wishy-washy and too liberal? Only an option when you don't like the other two? Probably all the above, and more. But the reality paints a slightly different picture. In Nick Clegg and Vince Cable they have people who are a long way from 'faded orange'. And they both have what it takes to be a positive voter choice, rather than the default option."

He recalled that Mr Kennedy's decision to oppose the Iraq war defined the Liberal Democrats' product: they became a brand. And, in other words, they need to do so again.

"They can be comforted that the perception of the Tories is 'untrustworthy', because nobody knows what their product is," said Mr Bean. "And that of Labour is shot, because their product is broken. These days we've so little to fight against; perhaps the Lib Dems' best chance for brand credibility is to define what we should be fighting for."

Over to you, Mr Clegg.