Analysis By Nick Assinder BBC News Online political correspondent

Polling stations opened on Thursday morning

No longer did voters simply swing between Labour and the Tories, but increasingly looked to his party to offer a practical, realistic alternative.

The Lib Dems, he said, were "really going places".

And there is no doubt that his candidates did extremely well in the overall share of the vote - pushing Labour into a humiliating and historically poor third place.

They also pulled off some sensational victories in a number of local councils in the north, most notably the once rock-solid Labour heartland of Newcastle.

The party's consistent anti-war stand almost certainly paid dividends, particularly where it was facing Labour in those local councils.

Bad news

And party leaders were quick to seize on the gains made in the north as proof the party could hammer both the main parties.

They insisted they had already proved they could take seats from the Tories in their home patches in the south and had now proved they could do the same to Labour in the north.

But, while Mr Kennedy and his troops have plenty to feel pleased with, there are still problems ahead, particularly when the general election comes around.

Kennedy can celebrate electoral gains

If the Lib Dems are to make a real breakthrough in that poll they cannot afford to see a revival of Tory fortunes in the south of the country.

And the bad news for Mr Kennedy is the suggestion from these elections that the Tories have been doing just that.

That suggests the anti-Labour vote has not simply transferred to Mr Kennedy's party but has seen large number of voters switching to the Tories as well - possibly returning to their old habits.

Wasted vote

And, of course, Mr Kennedy knows as well as anyone that there is a history of these protest votes melting away come a general election.

So, while he can celebrate the gains made in these polls, he will be well aware of the dangers ahead and the need to continue building on the advances made by his party over the past few years.

But there are no rules in politics and it is always possible that these polls, following a series of significant election advances for the party over recent years, may just signal a permanent trend.

Probably the best news for him is that the old argument that people would never vote Lib Dem because they knew the party stood no chance of winning elections has been pretty well blown away.

That is no small thing. If voters can be persuaded, come general election time, that a Lib Dem vote may not be a wasted vote, then his dream of a three party system may yet come true.