Charles Kennedy has dismissed suggestions that trade unions are holding back reform in the public services - praising their liberal credentials.

In a warmly received speech to TUC congress, the first time a Lib Dem leader has addressed the gathering, Kennedy said the unions and his party had a long history.

At a time of unprecedented tension between the trade unions and the party they founded, he reminded his Blackpool audience that before the creation of the Labour Party, Liberals represented workers.

"The earliest trades union members were Liberals," he said.

"Liberals in government pioneered the state pension. It was a Liberal, Beveridge, drawing on the work of the trade unions who went on the lay down the intellectual foundations of the welfare state."

Although the Lib Dem leader has denied a bid to drive a wedge between the unions and the Labour government, he told restless TUC delegates that the tide of public opinion had turned against Tony Blair.

Kennedy predicted it was moving towards Liberal Democrats and trade unionists - who are united in their opposition to issues from war on Iraq to public services.

"Of course we are not going to agree automatically with everything you say. But we'll listen."

"You won't catch Liberal Democrats describing trade unionists as wreckers," he said to applause.

"And I believe the momentum of public opinion is swinging towards both of us - Liberal Democrat and trade unionists alike."

Using the language of cooperation, Kennedy urged "progressive forces" to work together.

"The Liberal Democrats and the TUC are never going to be in each other's pockets. From our financial point of view, chance would be a fine thing," he said.

"But just as we have to build a party that's in no-one else's pocket, largely by digging into our own, so the progressive forces in our society can only stand to mutual benefit by a principled process of cooperation."

Revealing his own trade union past, Kennedy claimed Lib Dems and the TUC shared a "big picture" vision - particularly on Europe.

"I'm a lifelong believer in trade unionism. When I was given a job as a shelf-stacker as a teenager, I immediately joined the shop-workers union USDAW. And from my first days as an MP, facing the onslaught of Thatcherism, I was convinced that strong trades unions were healthy for society," he told the Blackpool audience.

"There' s an emerging consensus between us - from Europe to environmental responsibility, from employee rights to worker participation, from public services to the welfare state."