Kennedy: We are no flash in the pan
In his New Year message he said there had been positive international developments since 11 September, and that the new coalitions should be developed to promote peace, humanitarian aid and economic development.
"Historians may see it as significant as 1945 when the Second World War ended or 1989 when the Berlin Wall fell.
"On 11 September, we saw terrorism of a completely new order. And in the weeks since then, we have seen a coalition of nations mustered on an equally unprecedented scale, with Russia working closely with the Western allies and states like Iran being brought in from the cold.
"These events have emphasised as never before the shortcomings of a narrow nationalist approach and the necessity for internationalism. "
'Would break coalition'
Mr Kennedy stressed that the party's support for action in Afghanistan did not amount to a blank cheque.
"We have particular concerns, at the turn of this new year, about the prospect of an attack on Iraq in the absence of clear proof of an Iraqi link with the events of 11 September.
On the domestic front the Lib Dem leader hailed the party's performance in the June election which had dashed predictions of the 1997 result being a flash in the pan.
"We made more gains than any other party. And now we are proving that we are the only effective opposition to the Labour government," he said.
"Since the election, more and more voters are turning to the Liberal Democrats. Some are high profile. The former Labour MP Paul Marsden has joined us.
"Thousands of others around the country are turning away from the extremism of the Conservative Party and from a Labour Government which has not delivered what it promised. "
'We had the courage'
But, he says, the Lib Dems are not just a "refugee camp for disaffected supporters of other parties".
"We are a 'forward base' for a fresh approach to British politics. We know that our hospitals, schools, buses and trains are far below the standard which they should be.
"But alone of the main political parties, we had the courage and frankness at the General Election to explain that those who can afford it would have to pay a little more in income tax to make a real difference. You can't get something for nothing.
"The Conservatives meanwhile are thrashing around in their efforts to erase the memory of their record on public services. They're even talking about charging people to see the doctor.
"We Liberal Democrats can demonstrate the effectiveness of our policies. In Scotland, where we share power, we have secured the abolition of tuition fees and free personal care for the elderly."
On the euro, he said it was time for the government to "stop dithering".
"At long last it is the pro-European cause that has the momentum," he said.
Delaying further would "alienate a growing body of pro-europeans in business and the trade unions who are losing patience with New Labour".