Ed Miliband has said the Liberal Democrats made a "tragic mistake" joining with the Conservatives in the coalition Government.

The Labour leader, who beat Nick Clegg's party in the Oldham East and Saddleworth by-election, gave a speech to the Fabian Society think-tank in London.

He said: "Their decision to join a Conservative-led Government was a tragic mistake."

But he added that he hopes the Lib Dems will, in time, come to realise they blundered by agreeing to join a Tory-led Government.

He insisted that he wants Labour to stick to the political centre ground and represent voters from the mainstream of society.

"Labour over the next four years must become again the standard-bearer of the progressive majority," he said.

"We must rebuild ourselves as a broad movement of the British mainstream that politicians have talked about for decades but often not understood."

He called on his party to rebuild itself as the voice of voters in "the real centre ground" of politics.

"I want to become the voice and hope of those who feel squeezed by an economic system that promised to liberate them," he said.

"I want us to articulate the frustration of people who are fed up with bankers taking vast public subsidies and then rewarding themselves for failure while the rest of the country struggles.

"I want us to be the party that answers the call for a fairer sharing of the nation's wealth, strong and responsive public services and a different kind of politics.

"This is the real centre ground of British politics and it is our duty to speak up for it."

Mr Miliband also reached out to disaffected Liberal Democrats, saying he was ready to work with them 'in Parliament and outside it' to oppose the direciton of the coalition Government.

"There are many Liberal Democrats who have decided to stay and fight for the progressive soul of their party.

"Most of them do not want to see their progressive tradition sacrificed for personal ambition.

"I respect their choice too and I understand how painful it must be to watch what is happening to their party."

But responding to the speech, secretary of state for transport Philip Hammond said Mr Miliband had not gone far enough:

"Ed Miliband promised an apology today. But the only mistake he was willing to admit to was not being left-wing enough.

"What the British people deserve is an apology from Labour for maxing out the nation's credit card during the good years and burdening our grandchildren with debt, but Ed Miliband is still in denial.

"Until he admits to the big mistakes the last government made and comes up with a credible plan for dealing with Labour's mess, he cannot be taken seriously."

And Mr Miliband's olive branch was dismissed by Simon Hughes, Deputy Leader of the Liberal Democrats, who also addressed the conference.

He told Lib Dem supporters to 'resist the blandishments of the Labour leader.'

"Last May, the electorate walked away from Labour and Labour walked away from government," he said.

"Liberal Democrats took up the challenge and decided that Liberal Democrats in government would achieve far more towards a liberal Britain by joining and making more progressive government, rather than stepping back and allowing Britain to be run again by the Conservative Party on its own.

"Radicals and progressives are alive and well in the Liberal Democrats and alive and well in the new coalition Government.

"As in any coalition we will not achieve all of our objectives all of the time.

"But we have already made much progress and we will make much more progress."

Source - Yahoo.