Nick Clegg the new Liberal Democrat leader.

Nick Clegg has won the race to become the next Liberal Democrat leader. (Source BBC)

The 40-year-old beat Chris Huhne to become the party's third leader in two years - in a contest which turned out to be even closer than expected.

Mr Clegg, an ex-journalist and former Euro MP, won 20,988 votes to the 20,477 votes cast for Mr Huhne by members.

Buckingham Constituency Lib Dems chairman Geoff Twiss said: ""This is an excellent result for the party. Leadership elections are always unsettling, and Nick will give us stability we need to get our party's message across. With Labour falling apart and the Tories unable to provide a convincing alternative to anything, there's a real need for the thoughtful and distinctive policies that the Lib Dems provide."

In his acceptance speech Mr Clegg said he wanted his leadership to be about "ambition and change", saying "we want to change politics and change Britain".

He said he wanted to mark the "beginning of Britain's liberal future".

Mr Clegg, speaking after the announcement at a central London hotel, acknowledged it had been a "close fought contest" and praised his rival, who he said he was looking forward to working with.

He said he wanted to attract those voters who shared liberal values, but did not currently vote for the party.

He thanked Vincent Cable for a "spellbinding" performance as acting leader - and praised his predecessor Sir Menzies Campbell, whose resignation in October sparked the leadership race.

Mr Clegg, who has two children with wife Miriam, a Spanish lawyer, said that without Sir Menzies, the party would not have the "bright future" it now faced.

He said Labour and the Conservatives were "mutating" into each other, and urged disaffected voters to join the Lib Dems, saying he wanted to "provide a liberal alternative to the discredited politics of big government".

He pledged to spend at least a day a week campaigning outside Westminster, and to hold regular public town hall meetings to give people who were not Lib Dem members, but supported the party, a chance to have their say.

He accused the Conservatives of having "no answers to the big issues" and said Labour was "increasingly exhausted and discredited" - saying it left an opportunity for the Lib Dems.

"I want the Liberal Democrats to be the future of politics, because Liberal Democrats have the courage to imagine a better society to break the stifling grip of the two party system for good.

"To bring in a new politics, of politicians who listen to people, not themselves. No more business as usual. No more government knows best.

"I want today to mark the beginning of a real change in Britain. The beginning of Britain's Liberal future."