Contrary to what some right wing nutters would have you believe (I'm talking to you Melanie Phillips you sour old hag), liberalism is not in favour of preventing the police from dealing with the rioters. Liberalism is about "the right to do as you please as long as you do not cause a nuisance to anyone else" - to paraphrase Milton. So here's a properly liberal solution on how to deal with the riots.
Stage 1 - Immediate
Police should restore order as swiftly as possible, if necessary with back up from the army. However, water cannons and rubber bullets are probably inadvisable as the former have been known to permanently blind people and the latter have been responsible for the deaths of 9 youths in the UK already. Some elements of the army, on the other hand, have been trained in riot control though, given their lack of powers to perform arrests, they would be most useful as a "presence" on the streets to discourage trouble.
Stage 2 - Within the next week
Once order is restored, the police should immediately begin rebuilding bridges with communities. After all, the trigger, though not the cause, of these riots was the shooting of Mr Duggan. It was a lack of trust in the police and possible mishandling of the subsequent peaceful protest that led to the first riot. Subsequent riots were almost certainly hooligans and criminals taking advantage of the situation but they only did so after they had seen people "get away" with the first riot.
Stage 3 - Within the next month
Those arrested and convicted as a result of their involvement in the riots should be dealt with. They should be given stiff community sentences (not sent to prison at our expense) and forced to fix the damage they've caused. They should be confronted with the people who's lives have been disrupted and, in some cases, ruined by the trouble they've caused. Simultaneously, there should be a thorough and swift investigation into the events which led to the riots in order to reassure communities that justice will be done with regards to the death of Mr Duggan.
Stage 4 - Over the next few years
The government, the police and local councils should begin seriously tackling the social causes that made this whole situation possible. The rioters are responsible for their actions and should be punished, but the only reason there were so many young people involved in criminal gangs and ready to go on a rampage is because of deep-rooted underlying social problems. There's a good explanation of some of these problems here but the basic cause is communities where generations have not shared in the increased prosperity in the good times and have been abandoned without opportunities for local people leading to so many young people becoming convinced that crime is the easiest and best choice for a career, a view which, coupled with resentment of the rest of society, leads them to the attitude where they're perfectly happy to smash things up and destroy other people's livelihoods. Unless these underlying issues are dealt with then these kind of scenes will happen once again in the future. It is up to this government to act, where previous ones have not, to ensure that the scenes we've seen this week are never repeated ever again.
That's what needs to be done, in my opinion, and it would be great if we could see a Lib Dem minister come out and actually say all that - doing that would quite probably help to nail this myth that liberals are rubbish when it comes to crime