David Cameron said he wanted to renegotiate the UK’s relationship with the EU, before asking people to vote.
The British people would face a “very simple choice” either to accept the result of the talks, or to leave the EU altogether, he said.
Labour’s Ed Miliband said PM was “weak” and being driven by “party interest”.
In a long-awaited speech, David Cameron pledged to hold a referendum during the early part of the next parliament – by the end of 2017 at the latest – if the Conservatives win the next general election.
He said it would be a decision on the UK’s “destiny” and, if he secured a new relationship he was happy with, he would campaign “heart and soul” to stay within the EU.
“It is time for the British people to have their say,” the prime minister said.
“It is time to settle this European question in British politics. I say to the British people: this will be your decision.”
The Conservative leader has been under pressure from many of his MPs to give a binding commitment to a vote on Europe.
David Cameron said “disillusionment” with the EU was “at an all time high” and “simply asking the British people to carry on accepting a European settlement over which they have had little choice” was likely to accelerate calls for the UK to leave.
“That is why I am in favor of a referendum,” he said.
“I believe in confronting this issue – shaping it, leading the debate. Not simply hoping a difficult situation will go away.”
Setting out the conditions for a future poll, David Cameron said: “The next Conservative manifesto in 2015 will ask for a mandate from the British people for a Conservative government to negotiate a new settlement with our European partners in the next parliament.
“And when we have negotiated that new settlement, we will give the British people a referendum with a very simple in-or-out choice to stay in the EU on these new terms; or come out altogether. It will be an in/out referendum.”
David Cameron said holding an in/out referendum now would be a “false choice” because Europe was set to change following the eurozone crisis and it would be “wrong to ask people whether to stay or go before we have had a chance to put the relationship right”.
The prime minister said he “understood the appeal” of Britain going it alone and said he was sure the UK would survive outside the EU. But, he said, the UK must think “very carefully” about the implications of withdrawal for its prosperity and role on the international stage.
“If we left the European Union, it would be a one-way ticket, not a return,” he added.
David Cameron rejected suggestions that a new relationship was “impossible to achieve”, adding that he would prefer all other EU countries to agree a new treaty but would be prepared to seek negotiations on a unilateral basis.
Several Conservative MPs – who want a looser relationship with the EU focused around trade and who were briefed about the speech – have said they are “satisfied” with the thrust of its contents.
But some europhile Conservatives, including Lord Heseltine, have warned that committing to a referendum at some point in the future on the outcome of an uncertain negotiating process was an “unnecessary gamble”.
The Lib Dems say pursuing a wholesale renegotiation of the UK’s membership will cause uncertainty and deter foreign investment while Labour claim David Cameron’s approach is being driven by party calculations rather than the national interest.
Labour said the referendum pledge defined David Cameron “as a weak prime minister, being driven by his party, not by the national economic interest”.
“We understand the need for change but I don’t honestly believe the best way to get change in a club of 27 is to stand at the exit door demanding change or threatening to leave,” shadow foreign secretary Douglas Alexander said.
The speech had been scheduled for last Friday in the Netherlands, but was postponed because of the Algerian hostage crisis.
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