In his address to the party's annual conference Mr Ashdown said: 'Look around this hall. How many can you see here who were the first from our party to be elected to their council?
'Where are they now, those once lone voices? They're chairs of education. They're leaders of councils. They're in power disposing multi-million pound budgets and improving the lives of those they serve.
'What we have done in local government I want to do nationally. To put our principles into practice, our policies into action.'
Labour-controlled councils were the last bastions of the party's old policies, he indicated.
'When, 10 years ago, I said that our job was to replace socialism, I never dreamt we would have a Labour Party leader who would do it himself.
'I know that - not in many council chambers - but in Westminster at least, socialism and all it stood for has been consigned to a quiet burial in an unmarked grave.'
He hinted he was minded to drop the long-standing Liberal Democrat demand to put 1p on income tax to fund improvements in education.
'We must not allow our defence of decent public services to tempt us into becoming the fossilised defenders of yesterday's state sector. Nor must we become the party which, whatever the government spends, simply says it will spend more, or whatever the government cuts, simply promises to restore them.'
He highlighted the importance of the Audit Commission in delivering efficient public services.
On Tuesday local government spokesman Paul Burstow MP, speaking during a debate on education, said the Tory government had created a free-for-all for school places by undermining the role of education authorities.
'Now, in areas where grant maintained schools exist in larger numbers both the funding agency for schools and the LEA struggle to plan for the likely demand for school places. Public money is wasted.'