Mike German addressed party members for the last time
Nominations have opened in the race to become the next leader of the Welsh Liberal Democrats.
Outgoing leader Mike German gave a farewell speech to the party's autumn conference at Clydach, near Swansea.
Afterwards, Cardiff Central AM Jenny Randerson declared she would stand for the role joining Kirsty Williams, the Brecon and Radnorshire AM.
Mr German, 63, a former deputy first minister, has led the party in Cardiff Bay since 1999 when the assembly began.
He has also been leader of the Welsh Liberal Democrats for the last year but he will officially stand down in December when his successor is elected.
In his speech at the event in Clydach near Swansea, Mr German warned there was a danger of the Welsh Assembly being left behind by the devolution movement.
He warned that while Wales was grappling with the question of law-making powers, Scotland was racing ahead by pushing for more financial autonomy.
Mr German claimed the union was "dead" and Wales faced a choice between federalism and independence.
AM Jenny Randerson immediately announced her intention to stand for leader following Mr German's speech, while Ms Williams launched her leadership campaign last month.
Ms Randerson served acting deputy first minister when Mr German temporarily stepped down in 2001.
She said she had already broken one glass ceiling by becoming the first woman Liberal Democrat in Britain to be a minister, and hoped she could now break another.
Jenny Randerson is joining fellow AM Kirsty Williams in the race
The AM added that deciding to run for the leadership was a move she had wanted to make on her own terms, and that she had wanted to wait until Mr German had officially resigned before making the announcement.
"My campaign will be all about change. Change of ambition," said Ms Randerson.
"We deserve to be in government. We have ideas but we need to get there and that involves changing our party and the way it views itself."
Ms Williams welcomed the chance to debate her own vision for the future success of the party with Ms Randerson.
She said: "I am pleased that we have a contest and that members will face a real choice for real change.
Mr German maintains he was always determined to stand down at this time.
But the prominent Lib Dem assembly member Peter Black had called for him to stand down much earlier.
Formerly a music teacher, Mr German was councillor and leader of the Liberal Democrats on Cardiff city council from 1983 to 1996.
He was deputy first minister from 2000-01 during the Labour-Liberal Democrat coalition and again in 2002-03.
He stood down between these dates during controversy over his role as head of the European unit of the Welsh examinations board, the WJEC.
Immediately after the assembly elections in May 2007, Liberal Democrat AM Peter Black called for Mr German to go.
He said the party needed a leader with a "fresh mandate".
From November 2007, Mr German became leader of the Welsh Liberal Democrats, after MP Lembit Opik stood down to concentrate on his bid to become Liberal Democrat president.
Mr German's political interests include skills development in Welsh companies, constitutional affairs and local government.
He wants to spend more time engaged in boosting links between Wales and Lesotho in the Dolen Cymru project.