Kennedy's speech is likely to be a conference highlight

They believe their plans to scrap the council tax and replace it with a local income tax will be crucial in their battle to win over voters.

About 1,000 delegates are expected in Southport for the three-day conference.

The party will also be debating whether to support a move to allow doctors to help terminally ill people to die.

'Unfair tax'

Lib Dem leader Charles Kennedy, who was forced to miss the Budget statement on Wednesday because of ill health, is due to arrive in the seaside town on Friday afternoon.

Local income tax is the foundation of what I would call nothing short of a Liberal revolution Edward Davey

A key plank of the party's campaign at this summer's local elections will be a move to scrap the unpopular council tax and replace it with a local income tax.

Delegates will have a chance to vote on the issue following a debate on Saturday morning.

Mr Kennedy, who will address the conference on Sunday, has said: "We will also abolish the most unfair and unpopular tax in Britain - the council tax - to replace it with a fair local tax based on the ability to pay.

"Many pensioners would pay no local tax at all."

Local government spokesman Edward Davey said the Lib Dems were the only party to have a clear alternative to the council tax.

'Power junkies'

A local income tax would be collected by the Inland Revenue, in the same way as it collects national income tax, saving millions of pounds in administrative costs.

The cash savings would probably be ploughed back into frontline services, said Mr Davey.

"We're doing this because we believe in it - we're not just doing it because we think it's going to win votes," he said.

The party decided to adopt the policy after studying how local income tax worked in a number of countries, including Sweden.

"There isn't a tax fairer than local income tax," said Mr Davey.

"The problem is the other parties are power junkies - they are incapable of letting go, allowing the communities of this country to be more vibrant, to take greater responsibility and to be more self reliant.

"The only way that can happen is if you have a new financial settlement. Local income tax is the foundation of what I would call nothing short of a Liberal revolution."

Assisted suicide

Delegates will also debate a plan to restructure the early years of school life, by delaying proper classroom teaching for five-year-olds until they are six to concentrate on structured play.

There will also be debates on Iraq, health, home affairs, the high prison population, the economy and tuition fees, which is expected to prompt a demonstration by students on Saturday.

It is something we can't have a party policy about because people have such different views on it Lib Dem spokesman

More controversially, delegates will consider the topical issue of euthanasia.

The party faithful will have a chance to vote on proposals to allow doctors to assist the death of patients who are terminally ill, or who have a severe, incurable and progressive physical illness.

The debate comes as the Assisted Dying for the Terminally Ill Bill received an unopposed second reading in the House of Lords a week ago.

It also follows the row sparked by the assisted suicide of 74-year-old motor neurone sufferer Reg Crew last year at a clinic in Switzerland.

A Lib Dem spokesman said whatever the outcome of the vote, the motion will not become party policy and will remain an issue of conscience.

"It is something we can't have a party policy about because people have such different views on it," he said.