Speaking at the Scottish Liberal Democrat autumn conference in Stirling, Mr Ashdown said: "Scotland has the chance, from next May, to show England the way.

"The success of the Scottish parliament will be a crucial test, not only of the value of decentralising power, but also of the benefits of a fair voting system.

The Jenkins Commission on Voting Reform is preparing to make its recommendation for an alternative, proportional voting system for elections to the House of Commons.

The commission is expected to deliver its recommendations early next month and the British electorate will be able to vote in a referendum for or against a revamped system to replace first-past-the-post.

"That referendum, when it comes, will be crucial in the project to build a modern Britain, and for good government in our country. To build on the way forward shown in Scotland," Mr Ashdown said.

Jim Wallace: Party willing to raise taxes

The advantages proportional representation offers, he claimed, include voters having more power over their politicians, more people being represented by politicians they actually voted for and every individual vote cast having a meaning.

Scotland's first parliament for nearly 300 years will be elected next year using both first-past-the-post and a party list system which is a form of proportional representation.

Mr Ashdown asserted Scotland was at the cutting edge of change in the constitution of the UK.

"Scotland is, I am convinced, leading Britain into an historic period of reform and modernisation."

Hague 'vague'

Mr Ashdown took the opportunity to ridicule Labour's third way and the Tories' British way philosophy.

"After one year leading the Conservative Party, William Hague has achieved the impossible - he has come up with a concept even vaguer than the third way.

"Indeed, so nebulous is it that Gordon Brown has claimed he thought of it first."

Mr Ashdown reinforced comments made earlier by Scottish Liberal Democrat leader Jim Wallace that the party was willing to raise taxes to invest in Scotland's future.

"As Jim Wallace has said, if it means using those tax raising powers to raise investment that Scotland needs for the future, then that is exactly what the Liberal Democrats will do.

"We say this not because we are a party of high taxation. We are not.

"We say it because we are a party of honest taxation.

"And because we are a party of the long term who can see what we have to do now if we are to build success and prosperity for our children."

Tory defector selected

The Scottish Liberal Democrats have selected a former Tory MP to contest the North East Scotland Euro by-election next month.

The choice of Keith Raffan, who defected to the Liberal Democrats in 1992, was announced at the conference.

Mr Raffan said: "I'm absolutely delighted to have been chosen. I left the Tory Party six years ago in protest at their sceptical policy on Europe."