Activists called for reform of schedule 7 of the 2000 Terrorism Act – under which David Miranda was arrested and held for nine hours last month.
Home Office Minister Jeremy Browne said powers were “too broad and overbearing” and extra safeguards were needed.
Mr Browne blamed Labour and defended his party's record on civil liberties.
The arrest of Mr Miranda, whose partner – Guardian journalist Glenn Greenwald – has written extensively about the activities of the National Security Agency and claims of unlawful behaviour made by whistle-blower Ed Snowden, was condemned by civil liberties campaigners.
At the time, ministers defended the police's actions on the grounds of protecting national security.
But Mr Browne told the conference that the scope of schedule 7 needed to be narrowed, suggesting it was a legacy of the last Labour government's “intrusive and authoritarian” attitude to personal liberties.
Party members backed proposals to reduce the maximum period of detainment permitted under schedule 7 from nine to six hours, to extend the right of a suspect to consult a solicitor and to repeal powers allowing the authorities to take certain body samples to establish identity.
This is not binding on the coalition government but will strengthen the Lib Dems' hand in negotiating with their Conservative coalition partners over any changes to existing legislation.
Mr Browne said: “They may not go as far as some people in the hall would wish but they are a substantial set of proposals that will move this legislation decisively in a liberal direction.”
The minister contrasted the Lib Dems' record with that of Labour and the Conservatives, saying they were the only “instinctively liberal” party when it came to defending civil liberties.
“Of course, this [Labour] is the party of ID cards, control orders and 90-day detention. We are not talking nine hours at Heathrow. Under Labour we were talking about 90 days at Belmarsh.”