Charles Kennedy has denied the election of David Cameron as Conservative leader could threaten his position.
The Lib Dem leader dismissed claims a resurgent Conservative Party would raise doubts about his claim to be the real alternative to Labour.
Critics say the new Tory leader could steal Mr Kennedy's clothes with his image as a young family man.
Mr Kennedy said his party won a million more votes at the general election and has its most MPs for 80 years.
He said he was leading his party in a united direction and warned his critics not to get "too carried away".
Mr Kennedy told BBC Radio 4's Today programme there were real policy differences between him and Mr Cameron on issues such as the Iraq war, university tuition fees and the environment.
"You will see very clear differences of policy and of substance between ourselves and the Conservatives," he said.
Mr Kennedy said the question of a coalition between the two parties was now "redundant".
"We do best as a party when we campaign independently under our own colours," he said.
"The one policy decision on Europe that the new (Conservative) leader has announced is that they're going to withdraw from the Conservative grouping in the European Parliament their British MEPs, so that's an isolationist approach and that's not the real world.
"On tuition fees [Mr Cameron] doesn't share with us the opposition to tuition fees."
In a speech later on Thursday, Mr Kennedy said Labour's "aggressive centralism" was damaging the delivery of services such as health and education.
He promised, in a speech to the Institute of Public Policy Research, to establish a "new contract between the public and politicians".
The UK's elected local representatives were "outnumbered almost three times over" by quango members, he said.
But public services remained "largely unresponsive".
Mr Kennedy has also renewed his concerns over "extraordinary rendition" - the US policy of flying terror suspects around the world for interrogation, often via British airports.
He accepted there was a difference between torture allegations and transit by plane. But he said if Britain was aiding the transport of suspects to other countries "it begs the question why".
"And if you allow 400 of these movements to involve British airspace and British tarmac and British soil over 18 airports through the length and breadth of the country, why is that happening, how long has it been happening, did the Foreign Secretary know about it?" he said.
"And why is the foreign secretary writing to the US secretary of state on behalf of Europe if he was aware of the policy in the first place?"
At prime minister's questions on Monday, Mr Blair said he did not know what Mr Kennedy was referring to "in respect of airports".
But he said rendition was a long standing US policy and neither the UK or US governments condoned the use of torture.