Lord Oakeshott admitted the LibDems have lost the "plague on both your houses" vote from people who do not support either the Conservatives or Labour.
He acknowledged that the party would not win back that section of the electorate in time for the 2015 General Election and called for the party to quit the Coalition after May's elections.
Lord Oakeshott told Channel 4 News: "We've had plenty of people who vote for us for our policies.
"But there are also a lot of people who vote for us because we are not Conservative or Labour.
"Now that second half, the 'p*** off' vote if I can call it that, we have lost that and we've lost it frankly mostly to Ukip and that is not going to come back."
In the face of dismal Lib-Dem opinion poll ratings, and the Government's thinning legislative programme, Lord Oakeshott said the "spark has gone" from the coalition marriage.
He added: "We must give ourselves a year to get our own messages firmly across. It's clear that we Liberal Democrats, having done our duty for the country supporting the Government getting our reforms through, are in grave danger ourselves."