With Iraq weighing heavily on his ratings, Blair put his government's economic credentials at the heart of the campaign.
Confirming the date after visiting Queen Elizabeth in traditional pre-election protocol on Tuesday, Blair vowed to build on eight years of growth to entrench future investment in public services, which he says his Conservative opponents will slash.
"It's a big choice, it's a big decision. The British people are the boss and they are the ones that will make it," he said outside his Downing Street office.
Blair had delayed the long-expected announcement by a day due to the death at the weekend of Pope John Paul II.
Public anger over the Iraq war could slash Blair's parliamentary majority. Five new opinion polls showed his party has lost ground to the main opposition Conservatives.
"Who would have thought a Labour government would become a lap dog to [US President] George Bush's right wing Republican administration"
Labour defector to opposition
Embarrassingly, one of the ruling Labour Party's candidates, Stephen Wilkinson, said on Tuesday he was defecting to the Liberal Democrats, the only major British party to oppose the Iraq war.
"Who would have thought a Labour government would become a lap dog to [US President] George Bush's right wing Republican administration," Wilkinson said.
Conservative leader Michael Howard focused on Blair's perceived Achilles Heel - reduced public trust after Iraq.
"The choice before voters on 5 May is very clear," he told party supporters. "They can either reward Mr Blair for eight years of broken promises ... or they can vote Conservative.
Surveys in Tuesday's Guardian, Times and Independent newspapers gave Labour a lead of just two or three percentage points.
"It's a big choice, it's a big decision. The British people are the boss and they are the ones that will make it"
British Prime Minister Tony Blair
Separate surveys of voters who said they would definitely vote even gave the Conservatives a lead.
If those figures were replicated on polling day, analysts say, Blair would still win a third term but with a much looser grip on parliament.
At the previous two elections in 1997 and 2001, Blair easily won triple-digit majorities.
Under Britain's constitution, the monarch has to officially dissolve the current parliament at the request of the prime minister before a new election can be held.