EDMONTON - Danielle Smith has been picked as the new leader of Alberta's Wildrose Alliance Party.

She defeated candidate Mark Dyrholm at a leadership convention in Edmonton Saturday.

Smith replaces interim leader Paul Hinman, who gave the fledgling party its first seat -- and a boost of credibility -- last month when he won a byelection in the riding of Calgary-Glenmore.

Calgary-Glenmore had been represented by the governing Progressive Conservatives since 1971.

Recent polls have suggested the right-wing Wildrose party is surging while Tory Premier Ed Stelmach's personal popularity is in free fall.

The Wildrose party focuses on fiscal and social conservatism, and political commentators say it is benefiting from Tory supporters unhappy with the performance of the government in a struggling economy.

Smith won after a hard-fought, at times divisive campaign that offered party members a choice between two candidates with a lot of similarities.

Smith and Dyrholm, both 38, are staunch fiscal conservatives from Calgary and disaffected members of the provincial Progressive Conservatives. Both were, at one time, involved with business groups: Smith was the Alberta leader of the Canadian Federation of Independent Business, while Dyrholm, a chiropractor, was vice-president of the Progressive Group for Independent Business.

The difference was that Smith was viewed as more socially libertarian than Dyrholm, whose campaign received the high-profile backing of activist church groups such as Concerned Christians Canada and Equipping Christians for the Public Square.

Commentators and political scientists labelled Smith -- a telegenic former journalist, TV host and Calgary school trustee -- a big-tent moderate, who could appeal to a wider range of conservative voters and capitalize on the victory in Calgary-Glenmore.

Dyrholm, they said, would marginalize the party as a narrow and intolerant far-right protest group. He dismissed that criticism during the campaign, saying he is not out to impose his values on anyone.

Hinman, however, imposed his own views on the issue, saying earlier this month: "One candidate is focusing on a narrow base to win a nomination, and the other understands the big picture and wants to attract all Albertans."

The Wildrose race has played out over the past few weeks against discontent with Stelmach, both inside and outside the government Tory party.

Critics blamed the Calgary byelection loss on Stelmach's unpopularity in the city, along with new royalty rules that some in the energy sector say are sending investment dollars elsewhere.

The Tories are also wrestling with a $7-billion budget deficit this year and future losses that threaten to eat up the province's savings within three years.

Stelmach himself has felt the knife-edge of criticism from high-profile members of the Tory old guard. They have criticized his handling of the economy and say a surging Wildrose may be a comfortable new home for unhappy Tories.

Stelmach faces a mandatory secret-ballot leadership review in three weeks, the same process that kick started the in-house race that made him premier three years ago.

His predecessor, Ralph Klein, was handed a tepid 55 per cent approval rating in the same vote process and decided to retire. Klein said recently that Stelmach needs at least 70 per cent to continue as leader.

Stelmach has not commented on the 70 per cent idea, but has said it's "chaos" when a governing party dumps its leader in midstream.

The Wildrose Alliance Party started out as the Alberta Alliance, winning a seat under Hinman in the 2004 election in the rural riding of Cardston-Taber-Warner.

A disaffected group of party members subsequently split off to form Wildrose. The two sides got together just prior to the 2008 general election, which saw Stelmach and his Tories run roughshod over all comers, taking 72 of 83 legislature seats.

Hinman lost to the Tories in Cardston-Taber-Warner in 2008 before returning to the legislature in the recent byelection.

On platform issues, the Smith and Dyrholm were on similar wavelengths.

Both labelled the province's multibillion-dollar carbon capture plan a waste of money that should be scrapped. Smith saw it more as a political boondoggle while Dyrholm dismissed the concept of global warming as junk science.

Both candidates said the government has botched health care reform by collapsing regional health authorities to create an unwieldy provincewide superboard.

Dyrholm said the key to reducing surgical wait times and a bloated budget, which is eating up a third of all provincial spending, is to work with front-line staff to find the best cost savings.

Smith said the entire system has to be refocused to put the patient first and allocate funds based on work done, rather than on a lump-sum basis.

On abortion, both believe that the government should fund medically necessary or hardship procedures. Dyrholm said he'd put the issue to Albertans in a referendum, while Smith said she would not push it because it would only divide the party.