Vince Cable has renewed his call for billions of pounds more infrastructure investment funded by higher borrowing, saying the Government had to "really get moving".
The Business Secretary admitted there were dangers in pushing up the Government's debt in an effort to kickstart the economy.
But he insisted the "balance of risks" seemed to be changing and ministers had to be "open minded".
He also warned that Liberal Democrats would block any effort to cut crucial spending in areas such as science and skills, and said Tory efforts to reduce immigration were harming the economy.
The intervention came at a fringe event at the party's spring conference in Brighton.
Kicking off the gathering last night, Nick Clegg denied the Lib Dems were in crisis in the wake of sexual harassment allegations and the conviction of ex-Cabinet minister Chris Huhne.
But the Deputy Prime Minster conceded the party had "let people down" and needed to take a "long, hard look in the mirror".
The leadership is hoping to use the conference to draw a line under recent crises and build on the victory in the Eastleigh by-election.
Another potential conference flashpoint was defused earlier this week when Lib Dem health minister Norman Lamb announced that widely-criticised new regulations on competition in the NHS were being withdrawn.
However, there are still potential showdowns with activists over so-called secret courts legislation, and the coalition's economic strategy.
Labour has also challenged Mr Clegg to break coalition ranks by supporting the introduction of a mansion tax - long favoured by Lib Dems - in a Commons vote next week.
Reminding activists that it was International Women's Day, Mr Clegg said it was "right that - following the events of recent weeks - we take a long, hard look in the mirror".
He said: "No doubt you will be aware of the recent allegations that have been made about sexual harassment in our party.
"When concerns were brought to the attention of members of my team we acted to address them.
"But this should not have just been the responsibility of a few individuals acting with the best of intentions.
"It must be the responsibility of the party as a whole to make sure we have the processes and support structures in place now and in the future.
"We didn't, and as a result we let people down. Liberal Democrats, that is not acceptable to me."
The hall gave Huhne a warm round of applause after party doyenne Baroness Shirley Williams praised his record as a constituency MP and "brilliant" Cabinet minister.
She described as a "domestic tragedy" the situation of Huhne and Vicky Pryce, his ex-wife, who has also been convicted after she took speeding points on his behalf.
"We can only say of them that this is a tragedy that sometimes overcomes people not least those in public life," she told the conference.
Both David Cameron and Mr Clegg dismissed the prospect of increasing borrowing to fund more capital investment earlier this week after Mr Cable floated the prospect in a pre-Budget New Statesman article.
However, Mr Cable made light of the reaction last night, saying he noted the markets had not "collapsed" as a result.
"The point I was trying to make is that we need to be open minded and recognise that the balance of these risks may well be changing," he said.
Mr Cable said the decision by the former Labour government to cut capital investment had been a major policy error.
He pointed out that a £15 billion increase in capital spending would restore it to peak levels - although he stressed the figure was "illustrative".
He added: "That's a useful figure, but I am not specifically recommending that."
Mr Cable said he was on the "same page" as the Prime Minister, "but we have different emphasises and we use different language".
While Mr Cameron used phrases like "trees don't produce money", he preferred to say there was "no such thing as a free lunch".
"There are risks in any policy option we care to take," he said.
"But nonetheless the conclusion I have drawn is that we have to look at how we can really get moving with investment in infrastructure and housing."
Mr Cable has been listed with Tories Eric Pickles, Theresa May and Philip Hammond among ministers who are resisting further spending cuts.
He insisted he did not "need lectures" about the importance of managing public finances.
But he criticised some on the Tory right for waging "jihad" on state spending and warned it would be "utterly counterproductive" to cut science and skills budgets any further. "Lib Dems in government will not allow that to happen," he added.
The Cabinet minister also attacked the Tory drive to reduce net annual immigration to tens of thousands, complaining that the Lib Dems were having to "live with" it.
"It is politically ineffective and it is causing a great deal of economic damage," he added, indicating that Mr Clegg would be making a speech on the issue.
Mr Cable insisted more of the money needed to fill the deficit should be raised from taxes, rather than spending cuts.
He said the current ratio of spending cuts to tax rises was 80-20 or 85-15, and urged the introduction of measures such as the mansion tax, as well as a crackdown on long-term "non dom" residents.
"I think our view as a party must be that there has got to be a better balance between spending cuts and taxation," he said.
Party president Tim Farron will formally open the conference this morning, before a speech by former leader Lord Ashdown. Mr Clegg is due to do a question and answer session with activists later.