The Liberal Democrats now pose a "credible threat" to Labour ahead of the next general election, according to party leader Charles Kennedy.
Charles Kennedy put delegates on an election footing
Mr Kennedy told Scottish party members that the Tories were a "busted flush" and they should also set their sights on taking Nationalist votes.
Delegates at the Scottish Lib Dems' autumn conference were told that much was being achieved under devolution.
Now, said Mr Kennedy, it was time to focus on the Westminster fight ahead.
On the party's prospects in challenging the Tories, Mr Kennedy said: "They can't be ignored completely, although they are coming pretty close to it. We are the credible challenger to Labour.
"The Conservative Party is no longer even a credible challenger to the UK Independence Party."
Mr Kennedy said Tory support was falling and the election of Michael Howard as leader had failed to arrest the decline.
He accused the Scottish National Party of being uncertain on its strategy towards devolution in a Scottish Parliament and independence.
He said: "Do they want devolution to work, do they want to contribute to that process in a responsible, constructive way, so that Scotland steps out that bit taller, sharper and better?
"Or do they want this parliament, once described by their recycled leader as a pigmy parliament, to fail so that people lurch in a more extreme direction?"
He criticised the SNP leadership structure in which national convener Alex Salmond leads the party's Westminster group and his deputy leader Nicola Sturgeon leads Nationalist MSPs at Holyrood.
Mr Kennedy said activists should be seeking out the support of people who have voted SNP in the past.
Jim Wallace said Lib Dems can win more seats
Scottish Lib Dem leader Jim Wallace announced that Iain Smith would lead the Scottish party's election campaign.
Speaking on the eve of the conference, Mr Wallace said: "With 10 Westminster seats, the Liberal Democrats are currently the second largest Scottish party at Westminster.
"Despite the reduction in Scottish seats from 72 to 59, I am confident that the Scottish Liberal Democrats can win more seats from the Highlands to the Borders in next year's general election."
He said that, under Mr Smith's direction, the party had overtaken the Tories and had come within 4% of the SNP's share of the vote at the 2001 Westminster election.
"I am confident that Iain Smith has the skills and experience to improve on that result in the next general election," he said.
Mr Smith, the MSP for North East Fife, said: "The tide has turned against the current government and it is the Liberal Democrats who offer the only genuine opposition at Westminster."