Westerwelle was re-elected by a whopping 95.8 percent of FDP members at the party's annual convention. They're meeting in the northern city of Hanover to set the party's platform ahead of a general election in September.

"We want to rule," Westerwelle told 660 delegates, making it clear he intended to return his pro-business party to government as a junior coalition partner after an 11-year absence.

In a combative speech that lasted nearly 90 minutes, the 47-year-old politician reaffirmed his party's promises to cut taxes if elected.

"We are the only true representatives of the middle classes - all the others have moved to the left," Westerwelle said.

"Tax cuts will help the economy more than subsidizing one sector after the other," he said. "We should relieve the burden on the middle class. That is the best answer to the downturn."

Economy the main battlefield in election

Germany, which relies heavily on its exports to power its economy, has been hit hard by the global economic downturn and the slump in global trade.

Unemployment rose in April to 3.46 million people, or 8.3 percent of the workforce.

This week the country slashed its tax revenue estimates for 2009 by close to 50 billion euros. On Friday, new figures showed that the economy contracted by nearly four percent in the first quarter of 2009.

Given the dismal economic outlook, tax cuts and recipes to beat Germany's economic downturn are already shaping up to be the most contentious issues in the elections.

But Angela Merkel's conservative Christian Democratic Union remains deeply divided on the chancellor's plans to promise German voters tax cuts from next year.

Merkel's grand coalition partner, the Social Democratic Party (SPD), has vowed to fight the election with promises to raise the tax burden on the rich and relieve low earners.

Merkel's government has already spent billions on shoring up banks and is considering bailing out large firms including ailing carmaker Opel and retailer Arcandor.

Westerwelle criticized the strategy, saying his party remained firmly opposed to the nationalization of companies and the differing treatment awarded to firms.

"If a big company goes bust, the German eagle flies in. If a small company goes bust, the bankruptcy vultures arrive," Westerwelle said.

An opinion poll commissioned by public broadcaster ARD this week showed the FDP down one point on 13 percent, the conservatives on 35 percent and SPD on 28 percent.

Westerwelle said Merkel's conservatives remained his desired coalition partner with the two parties broadly agreeing on many financial policies.

The FDP is already in coalitions with the conservatives in five German states governments.

sp/reuters/dpa/ap

Editor: Chuck Penfold