Lib Dem treasury spokesman Vince Cable has insisted there is no black hole in his party's tax and spending plans.
Mr Cable says 'tough choices' are needed
The party has pledged to axe top-up fees, replace the Council Tax with a new local income tax and give the elderly free personal care.
To pay for this, Mr Cable would bring in a 50p tax rate for earnings over £100,000 a year.
He would also axe Labour's child trust fund and ID card schemes as part of £5bn a year in Whitehall cuts.
The cash saved there would go to fund pensions, policing and health, he said.
Labour and the Conservatives have also declared war on what they see as Whitehall waste.
But Mr Cable said his plans steered a course between the inefficiencies of the left and the social inequality of the right.
Addressing the party's annual conference in Bournemouth, Mr Cable said there could be fair taxation and better services without "this obsessive Labour belief, New or old, that the man in Whitehall (and it usually is a man) knows best".
And it was also possible to have a liberal economy without "widening inequality and a free-for-all where the vulnerable are trampled underfoot".
"They are both wrong: I believe we can have both a liberal and fair economy, better public services and tax cuts for the less well off, strong growth with tough financial discipline.
"Our Britain, a Lib Dem Britain, would be a country which embraces economic freedom and social justice."
'No new taxes'
He ridiculed Tony Blair for considering a 50p top tax rate "dangerously radical" - suggesting Labour policies already forced many poorer people to pay much higher rates.
"We believe that too many people on modest incomes pay too much tax.
"Under our proposals for taxation and public spending 70% of taxpayers would pay less tax than they do at present."
Mr Cable promised no new taxes other than the new top rate of income tax and pledged not increase National Insurance rates.
He also ruled out lowering the threshold to below £100,000.
Speaking earlier to reporters he said the plans were fully costed and would keep within existing spending limits.
"Our basic approach is to spend more than we save," he added.
But he admitted the plans involved "tough choices", and would lead to Whitehall job cuts, over and above those already unveiled by Chancellor Gordon Brown.
"I am not going to pretend the Liberal Democrats are offering civil service jobs for life because we are not," he said.
He said the Lib Dems would scrap the department of trade and industry and dramatically scale back regional industrial assistance, which he said was overly-bureaucratic and "top down".
He said the Lib Dems would also cancel the final stages of the Eurofighter project and end the "incestuous" relationship between government and the defence industry, opening up procurement to international competition.
Other Lib Dem savings would come from:
Cutting the use of agency staff in the NHS, slimming down the Department of Health and cutting back on centralised targets and controls
Abolishing the Office of the Deputy Prime Minister
Selling off the Royal Mint to the private sector.
Mr Cable is also calling for immediate action to tackle Britain's growing personal debt mountain.
He is urging lenders to stop "recklessly fuelling" the surge in consumer spending and introduce more transparency into the system and remove incentives to borrow.
The Lib Dems also want financial institutions to give a small percentage of their profit to support Citizen's Advice Bureau.