His party may be struggling to reach double digits in the polls, but Nick Clegg is entitled to feel smug as he heads to Glasgow for this year’s Lib Dem conference. This gathering, the penultimate one before the general election, has long been circled in Westminster diaries as the moment when a challenge to his leadership would emerge. But Clegg will arrive free from any threats to his position.

Not even the coalition’s defeat over Syria has destabilised Clegg. If, in May 2010, you had told a Liberal Democrat that their leader would back the coalition going to war in the Middle East without a UN mandate and then lose a Commons vote on it, he or she would have said that he’d be finished. But even though 24 of 57 Lib Dem MPs didn’t back Clegg and the government’s motion, there’s no talk of a leadership challenge.

Clegg can thank Chris Huhne, the man he beat for the leadership six years ago, for this. The Lib Dem victory in the Eastleigh by-election, prompted by Huhne’s guilty plea, reassured the party that it wasn’t facing wipeout at the next election. Clegg is also helped by the fact that he is not a drag on the party’s fortunes among the quarter of the electorate who might actually vote for the Liberal Democrats. Those who detest him are those who wouldn’t vote for the party anyway.

But Clegg will not be out of the woods until after the European elections next year. The party will probably finish fourth and — ironically — because these elections use a proportional system, they’ll suffer particularly heavy losses. Insiders predict that their nine MEPs will be reduced to two. ‘If there’s going to be an issue, it’ll be after the European elections’, one figure from the potentially troublesome part of the party says.

For now, though, the challenge for Clegg is to ensure that the Lib Dems derive a political benefit from the economic recovery.  Those around Clegg argue that ‘the party took more than our fair share of criticism in the first half of the Parliament. Now that it’s at last going right we’ve got to ensure that all the credit doesn’t go to the Tories.’ The question is how to turn economic vindication into a political dividend.

The Clegg circle believes that it’ll be better to stand for ‘more of the same’ than ‘change’ at the next election. They calculate that, in the words of one of its members: ‘If the next election was between the coalition and the opposition, the coalition would win.’ This means that the Liberal Democrats have to emphasise what they have done in government rather than what they would have liked to have done differently.

The problem for the Lib Dem leadership is that much of what they’ve done in government isn’t party policy. So, because of the Liberal Democrats’ internal party democracy, they’ll spend next week trying to persuade the party to approve their new stances on tuition fees, nuclear power and the like.

It is critical that they succeed. One ministerial ally of Clegg warns: ‘We can’t say we deserve credit for what the government has done, if the activists are trying to define us against the government.’ At the moment, Clegg’s party managers are confident they’ll get their way on nearly all these motions. But it appears likely that they’ll lose on the top rate of tax — with the party voting to make a return to the 50p rate party policy.

This revolt on tax will be the way that the activists reassure themselves that coalition hasn’t turned them into Tories. But this ignores the fact that Liberal Democrat conference itself backed abandoning the party’s support for a 50p top rate in 2006. Back then, it was Vince Cable who persuaded the party to ‘choose substance and seriousness over symbols and sentiment’. Another stem-winder of a speech from him is the leadership’s last best chance of winning this vote.

Lib Dem policy motions used to be of little relevance outside the conference hall. But they now matter to the country as a whole. Why? Because a hung parliament remains the most likely result of the next election. Many in the party hope that coalitions with either of the main parties will be possible.

But they should be careful what they wish for. In 2010, coalition with the Tories was the only practical possibility. All the party had to decide was whether it wanted to be in office or not. But if both coalitions are on offer in 2015, the Liberal Democrats will have to say what kind of party they are — centre-left or centre-right. As one Lib Dem minister concedes, ‘that would create a schism’.

Those who would like to go with Labour after 2015 argue that a ‘Lib-Lab’ coalition would prove that the Tories have not annexed their party. It would re-establish the old policy of equidistance between the two other parties. This group also maintains that, in a second Lib-Tory coalition, David Cameron would have his hands tied ever more tightly by recalcitrant backbenchers. They claim that a government with Labour would open up new policy possibilities.

But swapping one coalition partner for another could make the Liberal Democrats look, to quote one senior figure, ‘like a promiscuous party with no principles’. Compounding this fear is the concern among Cleggites about what kind of Prime Minister Ed Miliband would be. Miliband’s behaviour over Syria has reinforced their view that governing with him would not be easy.

To the Deputy Prime Minister’s confidants, the Labour leader’s actions over Syria fit a pattern. Miliband has put parliamentary tactics ahead of strategy, and he has lacked the courage necessary to lead his party. ‘It confirmed for us some of his weaknesses as a leader,’ says one of Clegg’s long standing aides. ‘Is he someone capable of taking a decision and holding to it? Frankly, no.’ One Lib Dem minister is more direct: ‘A Miliband government would be catastrophic.’

Working out who to go into government with is a good problem to have. The Lib Dems, long dismissed as muesli-eating irrelevances, are now pivotal to the balance of power in Britain. It’s another reason for their leader to feel pleased with himself.