Charles Kennedy has the opportunity, but is he is capable of grasping it?

When, a few years ago, Charles Kennedy was languishing as the Liberal Democrats' agriculture spokesman, he made a little of what then passed for news in his party by suggesting that it might in time supplant the Conservatives as the main opposition to Labour. He was slapped down by Paddy Ashdown, and most observers, including this one, concluded that this was an eccentricity too far. Suddenly it doesn't look so eccentric. This week an ICM poll showed the Tories having dropped five points to 27 per cent since October and the Liberal Democrats gaining three to 23. If this movement was maintained, the parties would be level pegging by February and the Tories would be in third place by March.

Psephological trends aren't as neat or linear as that, of course. Nevertheless, you'd be hard put to imagine a gloomier moment for Iain Duncan Smith to rally his increasingly desperate party, as he tried to do at a meeting of the 1922 Committee in the House of Commons last night. At a time when the Government's problems are growing rapidly, the extraordinary, history-defying firmness of the Labour lead is explicable only as a function of the weakness of the main opposition party. Worse than this, for many members of Mr Duncan Smith's audience last night, it is their own political lives that would be at risk if these remarkable figures obtained at the next general election. They hardly need reminding that of the Liberal Democrats' target seats, Tory ones outnumber Labour's by a factor of around 10 to one.

Talk to people around Mr Kennedy and they strain to dampen expectations that might not be fulfilled. Popularity is volatile, they point out. Even if, miraculously, they party were to secure an equal share of the vote, that wouldn't translate into anything like an equal numbers of seats. Overtaking the Tories – even with their present leadership – may not be a realistic prospect until 2009, if at all. All true, of course. Still, there is every sign that Mr Kennedy may be on the brink of a big, perhaps even historic, opportunity.

The question now is whether he and his party are up to taking it. Before answering that question, you have to hope they are. The lack of a credible opposition is a terrible deformity of our times, allowing New Labour to function all too often as a one-party state, restrained only by an unelected clutch of editors whose priorities are frequently at odds with the country's. Nowhere would a lack of a questioning, challenging, opposition, capable of tapping into the public's deep fears and doubts, be more dangerous than on war in Iraq. Given that the Conservatives merely compete with the Government in their loyalty to President Bush, the Liberal Democrats are the only party that can provide reasoned, principled opposition to a war.

On this, Mr Kennedy has judged the mood of a very large section of the British public well. He has a clear line, which is that Britain should not go to war without explicit UN backing in a second resolution. There are certain echoes here of the Suez crisis in 1956. Hugh Gaitskell came into his own as Opposition leader during Suez.This is easy to forget because the governing party won the subsequent elections in 1959, albeit at a time when voters had never had it so good. But it only did so by having lost a Prime Minister in the process. It isn't incredible to think that Mr Kennedy could yet make a difference to whether Tony Blair agrees to back the US in the absence of a UN mandate. It is, anyway, his duty to try. But either way, if the mantle of Gaitskell falls on anybody, it will be on Mr Kennedy.

But it's possible that war won't happen, or that it will conform to the Kennedy rules. The politics of peace are a harder, less glamorous slog. Here too, there has been some progress, reflected in the fact that of the three leaders, he has the highest personal ratings. You could be cynical and say that such is public distrust of politicians, the least visible are bound to prosper.

But, outwardly laid-back as Mr Kennedy is, there is more to it than that. Though some around him nervously deny it, his party is more economically liberal than it was. In recognition of the fact that Gordon Brown is now spending as much as the public services can reasonably absorb, the party no longer calls for higher taxes and spending. Its appeal for diverse, decentralised services has the potential to meet the demands of the political times better than Labour's perpetual inner conflict between localism and command-and-control can-do. Is probable pre-election message –you paid the taxes, what did you get for it? – will resonate as loudly among Tory as Labour voters.

That said, peacetime opportunities do not at present abound. Because there is no prospect of the sort of by-election in a southern Tory-held seat that could transform the party's profile, the local elections and the London mayoral race – where Simon Hughes is polling a strong third, capable of squeezing the official Labour vote to dramatic advantage – become even more important. There are also deficiencies. The next generation of up-and-coming MPs is highly promising; among the so-called Shadow Cabinet, few apart from the heavyweight foreign affairs spokesman Menzies Campbell look easily capable of filling the ministerial portfolios they shadow. For the moment, that doesn't much matter. Measured against a Conservative Shadow Cabinet in which the leader is pleased to include the right-wing nonentity John Hayes, among others, they do pretty well man for man, woman for woman.

Which raises the biggest question of all. Could the man who last weekend presented Have I Got News For You – rather well – conceivably look like a credible Prime Minister in waiting? As it happens, Mr Kennedy's forays into light entertainment – provided they aren't too frequent – reach parts of the electorate few other politicians do. Not speaking like a politician has also hugely helped to raise his ratings. What's more, his shrewd judgement – above all in seeing that the Lib-Lab project had run into the ground – can't really be faulted. It's quite easy to see him making the Lib Dems fashionable, the party that voters are least ashamed of supporting.

But it won't be enough. If Ken Clarke were to become Tory leader, many of those exciting prospects would quickly evaporate. But even if that doesn't happen, Kennedy needs to raise his game a notch. He needs to take some stances that will resonate not only among those who agree with him but those who don't. Maybe Europe, as well as Iraq, is one of those issues. A referendum next year could provide him with just such an opportunity. But so could a government decision to delay it if he is prepared, as he probably is, to face down his own eurosceptics by condemning government timidity. Maybe it's another issue altogether. Assuming no Tory leadership change, the possibilities Kennedy predicted to much derision between 1997 and 1999 may finally be within his grasp. Whether he has the ambition and drive to make it happen is now one of the more interesting questions in British politics.

d.macintyre@independent.co.uk