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The Lib Dems are achieving "great things" in government, Nick Clegg has told party members - while acknowledging "nervousness" about the coalition deal with the Conservatives.

Speaking on the opening day of their conference in Liverpool, he said he was "proud" the party was in power and putting "liberal values" into practice.

The Lib Dem leader referred to "big and difficult decisions" ahead.

The gathering comes amid unease among many Lib Dems at future spending cuts.

The deputy prime minister has acknowledged that he could be in for a "rough ride" from some activists during the five-day event.

At a rally on the first day of the conference - the first time the party has met while in government for 65 years - Mr Clegg said it took "courage" to agree a deal with the Conservatives.

"Everything that has happened since has proved that you were right to do so," he said.

Mr Clegg said reforms to the tax system, taking some of the lowest-paid out of tax altogether, the imminent abolition of ID cards, restoring the pension link to earnings and a referendum on the voting system was evidence of the "huge progress" that the party has made since May.

'Long road'

He said the party faced "a long road ahead" with "new responsibilities and expectations".

"I know that being in the coalition still isn't always easy," he added

"We are a party that has always advocated pluralism - believing that politics can be better when different parties work together.

"But that does not mean that the nervousness some of us felt going into government has disappeared overnight. The different impulses that, for many people here, pulled heads one way and hearts another have not simply vanished.

"But we have done something bold, excited and unexpected. And, as a result, things will never be the same for our party again."

The coalition had ended the two-party "stranglehold" on British politics and Lib Dem participation in government would leave Britain "freer, fairer and greener".

Mr Clegg, who will make his main leader's speech on Monday, has said he expects some dissent from party members unhappy about plans for deep spending cuts set to be announced next month.

In a newspaper interview earlier on Saturday, Lib Dem Chief Secretary to the Treasury Danny Alexander suggested cuts to welfare bills could go even further than already indicated.

Earlier this month, Chancellor George Osborne signalled he wanted to shave an extra £4bn from the welfare bill - on top of £11bn cuts made in June's emergency Budget.

In an interview with , Mr Alexander was asked whether he "recognised" the £4bn figure.

He told the newspaper: "I think I wouldn't want to say it was going to be limited to that amount."

When asked if it could be more, he said ministers had not made a final decision yet but stressed the coalition was right "to look very searchingly at welfare".

Electoral reform

Addressing the critical issue of voting reform in his rally address, Mr Clegg said the current system for electing MPs was "not fit for purpose".

"It is a relic that deserves to be consigned to the past," he said.

He said that campaigners calling for change - including the Lib Dems - could win a referendum on replacing first-past-the-post with the Alternative Vote system planned for next May.

Former leader Charles Kennedy - who has warned the party to think carefully about the implications of future cuts - was due to speak at the rally but missed it owing to transport problems.

Lib Dem MP Tim Farron, who has previously called some Tory MPs "toxic", said it made his "blood boil" to hear criticism that the party had sold out and was "turning the clock back" to the 1980s.

He said the Lib Dems had to continue to demonstrate that they were a party that "genuinely understood freedom and fairness".

"This is our chance," he said. "This is the moment we deliver."