The suggestion forms part of a new youth justice policy that could be adopted by the party at its spring conference next month.
Children under 14 would be "held accountable for their acts" by specially trained panels and would receive "appropriate penalties", potentially including secure custody.
Linda Jack, chair of the Liberal Democrats' youth policy working group, said, where possible, her party had to differentiate itself from its Conservative partners in the coalition.
"This is a main area where clearly we have a different view and we feel our view is balanced up by evidence rather than emotion, which is where we feel the Conservatives are coming from," she said. "It will be something we can push with them."
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