LONDON (Reuters) - Prime Minister David Cameron promised on Wednesday to give Britons a straight referendum choice on whether to stay in the European Union or leave, provided he wins an election in 2015.
Cameron ended months of speculation by announcing in a speech the plan for a vote sometime between 2015 and the end of 2017, shrugging off warnings that this could imperil Britain's diplomatic and economic prospects and alienate its allies.
Cameron said Britain did not want to pull up the drawbridge and retreat from the world but that public disillusionment with the EU is at "an all-time high".
"It is time for the British people to have their say. It is time for us to settle this question about Britain and Europe," Cameron said. His Conservative party would campaign for the 2015 election promising to renegotiate Britain's EU membership.
"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 European Union on these new terms; or come out altogether. It will be an in-out referendum."
Cameron said he wants Britain to claw back some powers from Brussels, a proposal that other European countries reject. Britain would do an "audit" to determine what powers Brussels had that should best be delegated to member states.
Sterling fell to its lowest in nearly five months against the dollar on Wednesday as Cameron was speaking.
Whether Cameron will ever hold the referendum remains as uncertain as the Conservatives' chances of winning the next election due in 2015.
They trail the opposition Labour party in opinion polls, and the coalition government is pushing through painful public spending cuts to try to reduce Britain's large budget deficit, likely to upset voters in the meantime.
Cameron's promise looks likely to satisfy much of his own party, which has been split on the issue, but may create uncertainty when events could put his preferred option - a looser version of full British membership - out of reach.
The move may also unsettle other EU states, such as France and Germany. European officials have already warned Cameron against treating the bloc as an "a la carte menu" from which he can pick and choose membership terms.
The United States, a close ally, has said it wants Britain to remain inside the EU with "a strong voice".
The speech could also exacerbate rifts with Cameron's pro-European Liberal Democrat junior coalition partners.
Cameron said he would prefer Britain, the world's sixth biggest economy, to remain inside the 27-nation EU but he also made clear he believes the EU must be radically reformed. It was riskier to maintain the status quo than to change, he said.
"The biggest danger to the European Union comes not from those who advocate change, but from those who denounce new thinking as heresy," he said.
If Britain left the EU, Cameron said it would be "a one-way ticket, not a return", adding however that he would campaign to stay inside a reformed EU "with all my heart and soul".
"WAFER THIN" CONSENT
Cameron said the euro zone debt crisis was forcing the bloc to change, and Britain would fight to make sure new rules are fair to countries that do not use the common currency. Britain is the largest of the 10 EU members that do not use the euro.
Democratic consent for the EU in Britain was now "wafer thin", he said, reflecting the results of opinion polls that show a slim majority would vote to leave the bloc and the rise of the UK Independence Party that favors complete withdrawal.
"Some people say that to point this out is irresponsible, creates uncertainty for business and puts a question mark over Britain's place in the European Union," said Cameron. "But the question mark is already there: ignoring it won't make it go away."
Avoiding a referendum would make an eventual British exit more likely, not less, he said.
"Simply asking the British people to carry on accepting a European settlement over which they have had little choice is a path to ensuring that when the question is finally put - and at some stage it will have to be - it is much more likely that the British people will reject the European Union."
Asked after the speech whether other EU countries would agree to renegotiate Britain's membership, Cameron said he was an optimist and that there was "every chance of success."
"I want to be the prime minister who confronts and gets the right answer for Britain on these kind of issues," he said.
Cameron's speech has been marked by long delays and was postponed from last week due to the Algerian hostage crisis.
(Editing by Guy Faulconbridge and Peter Graff)
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