Its the difference between classical liberalism and modern liberalism. Classic liberals believe in laissez-fare policies and the free market, while modern liberals still believe in a market economy but support more social policy and government involvement in things like infrastructure, health, education etc.
In most places "liberal" refers to classical liberal, whereas a modern liberals would more likely be termed progressives or the centre left. In the US liberal tends to refer to modern liberals while classical liberals are referred to as conservatives.