Charles Kennedy believes his party will be able to capitalise on public disillusionment with the government in May's local elections.

Launching the Liberal Democrat's local government campaign on Monday, the party leader said there was "a degree of disapproval indeed disillusionment with Labour in office".

Focusing on the fact that the Lib Dems are now a significant force in local councils, the party's central theme is that it offers value for money against Labour and the Conservatives.

A confident Kennedy said the Liberal Democrats were now in "a credible position in local government" and made most of his attacks at Labour's expense.

"I'm very heartened indeed by what I've seen and heard. Internal morale is good. There are gains that we can make at the expense of both parties but particularly the Labour Party," he said.

"Right across the country there is real disillusionment with Labour's record in local government."

He accused Labour of non-delivery and inefficiency and repeating the same mistake as the Conservative governments by increasing centralisation.

"It has increased people's feeling that their local council is powerless to deliver on the issues that matter," Kennedy said.

"Liberal Democrats offer value for money, investment in education and have a strong environmental record. Liberal Democrat-controlled Liverpool has cut tax where Labour had previously made it the higest in Britain. Primary schools in Richmond gain some of the best results in the entire country, and in Sutton they have one of the best recycling schemes."

The Lib Dem leader rejected the idea that it was a problem being considered to be "the same" as the other two parties by voters. He said it was a mark of how far the party has come.

"It's rather good to be considered part of the establishment having been excluded from such opinions in the public mind."

He said it was unfortunate that the issue of how local government funding is raised was not going to be an issue in this round of elections as he believed the electorate wanted change and would support a move towards local income tax.

Kennedy claimed the Conservative Party's campaign, also launched on Monday, was lacking momentum. He believed this was the reason why the Tories had decided to launch their campaign in Bradford rather than London.

"Our party seems to be buoyant and the Conservatives seem to lack a degree of buoyancy. Perhaps Ian Duncan Smith hopes to float above all that," he said.

He backed David Blunkett's remarks over the BNP but warned there was a danger in setting up units to focus on far-right activity.

"There is the one element of caution I would put into all this. I don't think we want some kind of structure. That elevates them to a level that frankly they do not deserve."

He admitted that apathy was the party's biggest enemy and called on voters to make their voice heard on May 2.

"There is the principle that your vote always does matter. The decisions taken in the council chamber have as much impact as those taken in the Commons chamber. It's important that people vote Liberal Democrat because that's the vote that actually delivers change."