Liberal Leader Stephane Dion announced Monday that he will stay on as head of his party only until the next party convention, when he will step down so the party can choose a new leader.

"I have informed the president of the Liberal Party of Canada and the president of the national caucus that I will stay as leader until a new leader is chosen at a leadership convention that I have asked to be organized," Dion said at a much anticipated press conference in Ottawa.

Dion said he will stay on as leader to prepare the Liberals for an orderly transition under a new leader.

Dion, who helped formulate the Clarity Act, said he came to politics to help keep Canada united, and he fought for a fairer, richer Canada "for the next generation." But he said Canadians did not learn about the "real" Stephane Dion, blaming Conservative "propaganda" for misrepresenting his leadership and goals.

He said Canadians only learned about the true Dion during the leadership debates, where he said he was told he gave good performances.

"Canadians did not know this Stephane Dion. They knew another one ... they believed that (the other) character was real," he said, referring to the Conservative attacks.

"I want to see that the next leader is not as vulnerable to the low propaganda that was directed against me."

Dion also said his Green Shift carbon emissions plan was misrepresented. He said most Canadians believed that it was just a carbon tax, something that concerned them as the economy worsened.

But Dion defended his plan, calling it the vanguard of environmental policy. However, the beleaguered Liberal leader did not say whether or not he will run in the next federal election.

"One step at a time," he said.

Liberals look to rebuild

Dion's Liberals suffered one of their biggest election defeats in party history on Oct. 14, winning only 76 seats, a 27-seat decline from 2006. Stephen Harper's Conservatives didn't win a majority but increased their seat-advantage in a minority government.

After Dion's press conference, Conservative strategist Goldy Hyder praised Dion's dedication to his party and Canada, but he said the Liberal leader missed the central point of the campaign.

"There's a certain amount of naiveté in his comments ... This is politics," he told CTV Newsnet.

Hyder said the Conservatives were better financed and had a better media strategy because their message resonated with voters.

"Money follows the message," he said, noting that the Liberal Party has bigger problems to deal with than just picking a new leader.

Liberal strategist Greg MacEachern admitted that the Grits need to rethink their fundraising efforts.

"We have to do a better job, frankly," he said.

Bob Rae, the Liberal foreign affairs critic who won his Toronto-area riding last week and is considered a top leadership contender, said the party has a lot of rebuilding to do.

He called Dion "a man of real determination," but noted the party was at a "moment of reflection."

"We have to renew the party. We have to renew the membership of the party. We have to open up the membership. We have to renew the finances of the party. There's lots of work to be done," Rae told CTV Newsnet's Mike Duffy Live in Toronto on Monday evening.

But the former Ontario premier wouldn't say if he would run for the Liberal leadership, saying only that he will make up his mind in the next few weeks.

A more effective fundraising campaign helped the Tories air a series of ads about the Liberals and Dion, even before the election writ was dropped. The ad campaign focused on Dion's leadership characteristics and suggested that he was a weak and ineffectual leader.

"They were able to have those ads up early. Those ads were able to do a devastating job of defining Mr. Dion," MacEachern said.

Dion came to power as the head of the Liberal Party on a green platform after a hard fought convention in 2006. But his environmental stand may have been Dion's ultimate downfall, CTV's Ottawa Bureau Chief Robert Fife told Newsnet on Monday afternoon.

Fife said many senior Liberals, including his former leadership rivals Rae and Michael Ignatieff, warned Dion that if he based the Liberal campaign on a carbon tax "it would be an electoral disaster."

The decline in Liberal seats after the election has made Mr. Dion quite unpopular, Fife said. "He's going to have a great deal of trouble trying to control this party as he stays on as interim leader," he said.

Liberal Party President Doug Ferguson released a statement saying Dion's decision to stay on as interim leader will help the party.

"As Party President I welcome Mr. Dion's decision to lead the Liberal Party and the Liberal Caucus until a successor is duly selected. We feel this course of action will ensure stability at this important time in our party's history," he said.

The statement said the party's constitution calls for a convention date to be set within the next 27 days and a convention date will be announced in the coming weeks.