Nick Clegg has told Liberal Democrats that his party has not lost its identity by governing with Conservatives in a coalition.
The Deputy Prime Minister hailed the by-election victory in Eastleigh as proof that the Lib Dems can profit from being in Government.
He also dismissed the "myth" that forming the coalition has undermined their identity or ability to fight the Conservatives.
The rallying cry was made in his keynote speech to the Lib Dem spring conference in Brighton.
The leadership has been eager to use the gathering to move on from damaging allegations of sexual harassment by Lord Rennard - which he denies - and the conviction of former Cabinet minister Chris Huhne.
In his speech, Mr Clegg sought to rally his troops by rounding on critics who wrote the party's "political obituaries" before last month's by-election campaign.
"The odds were stacked against us. A fierce campaign, under a national spotlight, dogged by difficult headlines from day one. Extraordinary circumstances. Yet we still won," he said.
Mr Clegg, whose party holds the minority position in the Government, likened the Conservative Party to a shopping trolley with "wonky" wheels.
He said: "Every time you want to push it ahead it veers off to the right-hand side."
He added that Labour "was embracing opposition in the worst possible way" and had hijacked the Lib Dems idea for a mansion tax.
Mr Clegg at the Eastleigh by-election with Mike ThorntonMr Clegg added: "We didn't win in Eastleigh in spite of being in power. We won in Eastleigh because we're in power - locally and nationally."
He conceded that some Lib Dems had harboured "quiet fears" that coalition would do irreparable damage to the party.
But he insisted that the risk can pay off at local elections in May and the next general election in 2015.
"There is a myth that governing together, in coalition, diminishes the ability of the smaller party to beat the bigger party.
"The idea that, in Tory facing seats the Liberal Democrats will find it impossible to distinguish our record, our values, from theirs," Mr Clegg said.
"But that myth has been utterly confounded. The opposite is true. The longer you stand side-by-side with your opponents the easier your differences are to see. We don't lose our identity by governing with the Conservatives.
"The comparison helps the British people understand who we are."
Some Lib Dems and Conservatives have struggled accepting a coalition ruleMr Clegg said that previous governments allowed the City of London to benefit at the expense of private enterprise elsewhere in the UK.
He said chances had been "squandered".
Earlier on Sunday Lib Dem schools minister David Laws told Sky's Dermot Murnghan the party was in "very good form" at the conference after the Eastleigh success.
He said: "The party is in a very confident mood down here in Brighton after a fantastic by-election victory in Eastleigh in very difficult circumstances against the odds.
"I think that has given people in our party real confidence that we can be in Government at a very difficult time, taking some tough decisions but also delivering some of the policies in our manifesto.
"And we can also win confidence from people in places like Eastleigh where we have been serving the local population at a local and national level for many years so the party is in very good form here."
However, Saturday's conference session was tarnished by bad-tempered clashes between Mr Clegg and activists over so-called secret courts legislation and benefits changes.
The Justice and Security Bill was comfortably given its third reading in the Commons last week, despite a rebellion from some Tories and Lib Dem MPs and continuing opposition from civil rights campaigners.
The party leader had said the intelligence services were currently unable to defend themselves in some civil court cases because they could not disclose sensitive material.
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