This confusion appears only to exist in the English speaking world, however. While in Canada, Britain and America the word is often used as a vague, wooly hold-all term to denote a sort of 'socialism-lite', its meaning is very different in Europe (and to some extent Australia).
It was a time when both liberals and socialists - as different as night and day in their objectives - were kept out of the conservative and often absolutist establishment in Europe. In Britain and her dominions however, they were the establishment.
The European tradition of Liberalism, best demonstrated in parties such as the German Free Democrats ('Die Liberalen') and the Swiss Free Democrats/Liberals ('Les Libéraux-Radicaux' in French) is something which simply does not exist in British politics.
These parties are what you might call Thatcherite on economic policy and individual responsibility (Guy Verhofstadt, three-time Belgian Liberal prime minister was called 'Baby Thatcher' in the 1980s), but at the same time very socially liberal and committed to the welfare state in a way British Conservatives find very difficult.
This is in contrast to the German right's dominant Christian Democrats, who are far more conservative on social issues and only grudgingly, suspiciously supportive of free market economics. They are also the Conservatives' official 'sister' party.
It is for this reason that the great liberal economist F. A. Hayek added Why I Am Not a Conservative to the end of his seminal work The Constitution of Liberty - once hurled onto a table by Margaret Thatcher to the words 'This is what we believe.' It opened with the words;
At a time when most movements that are thought to be progressive advocate further encroachments on individual liberty, those who cherish freedom are likely to expend their energies in opposition. In this they find themselves much of the time on the same side as those who habitually resist change. In matters of current politics today they generally have little choice but to support the conservative parties.
This distinction is simply not present in British politics - both traditions find their home under the umbrella of the Conservative party, meaning that I - a liberal at heart - am in the peculiar position of potentially sharing a platform with people who think Sarah Palin and Michele Bachman are the new messiahs.
More confusing still is the idea of the Liberal Democrats being in the same European party as the above-mentioned Swiss and German Free Democrats. It simply makes no sense. This blog has commented before on the Lib Dems being dominated by social democrats, and the party has major ideological differences with its classical liberal European counterparts.
One can only assume they are part of the European Liberal Democrat & Reform party simply through a case of semantics. A lazy association, if ever there was one, to pair ex-Labour and Social Democratic politicians with 'Baby Thatcher'.
If there is to be a wholesale shake-up of British politics in the coming years and if we do, after all, end up with a system of proportional representation - I dearly hope some of these semantic confusions will be cleared up, not least because it will give voters a much clearer idea over what they are actually voting for.
NB - an amusing and illuminating quote from former Tory MEP Edward McMillan-Scott in March of this year: 'From being a liberal Conservative I have become a conservative Liberal.' Quite.