The number of seats gained by the Liberal Democrats at the general election was "disappointing", party president Simon Hughes has admitted.
Mr Hughes said the local income tax policy was flawed
The Lib Dems gained only an extra 11 seats on the 2001 election results and failed to oust several Tory front-benchers in target seats.
Mr Hughes partly blamed this on plans to replace council tax with a regionally variable local income tax.
He said the idea was flawed as it meant different things in different areas.
Under the plans, council tax would have been replaced with a system of local taxation based on the ability to pay. The party said this would be fairer.
But because local income tax was to be set by local councils it meant the tax could vary widely.
Speaking on BBC One's Politics Show on Sunday Mr Hughes said: "I supported local income tax as a change. But there was a flaw.
"And that was that it meant different things in different parts of the country.
"And that's why I don't think actually in the end it worked well."
Ex-Lib Dem MP Sue Doughty, who lost Guildford to the Tories, said it had been difficult to sell the policy plan to middle income earners in her seat.
Some earners in the middle income bracket were also surprised to discover how much more they would be paying under the scheme.
The figures also seemed to catch worn out Lib Dem leader Charles Kennedy by surprise during one campaign press conference.
He was later corrected by his Treasury spokesman Vince Cable.
Overall Mr Hughes praised his party's performance as "good progress" - the party has its highest number of seats since 1923.
But he acknowledged it was "disappointing compared to the upper target we had hoped to get".