Prime Minister David Cameron dissolves Parliament

The campaign for the May 7 poll kicked off in earnest with all three major parties making their pitch for voters in an election which is widely expected to end with another hung parliament.

Conservatives issued a claim - hotly disputed by Labour - that victory for Ed Miliband could force taxes on an average household up by more than £3,000 a year.

And Labour warned that the referendum on EU membership promised by Mr Cameron represents “a clear and present danger to British jobs, British business, British families and British prosperity”.

Meanwhile, Deputy Prime Minister Nick Clegg said Britain was at risk from a “lurch to the left or the right” under a Labour or Tory majority administration, and promised that his Liberal Democrats would keep the future government “anchored in the centre ground”.

Mr Clegg was due to follow the Prime Minister to the Palace in his role as President of the Privy Council, which has its final pre-election meeting.

In a video message released on YouTube shortly before his trip to the Palace, Mr Cameron said: “This election is a big choice. Either I will come back to Downing Street and carry on with the plan that’s turning the country round and funding our public services, or Ed Miliband will walk into Downing Street with more debt, more spending, more taxes - all the things that got this country into a mess in the first place.

“I’m going to be campaigning as hard as I possibly can over these next few weeks to make sure that we stick to the plan that’s delivering security for Britain, but more to the point for you, your family and for your children’s future.”

Mr Cameron’s Conservative Party entered the first day of campaigning buoyed by an opinion poll giving it a four-point lead over Labour - its biggest advantage since September 2010 - overturning a similar lead for Labour in a survey released over the weekend.

Mr Miliband launched Labour’s business manifesto in London with a commitment to “return Britain to a leadership role” in Brussels.

He accused Mr Cameron of overseeing a “divided Conservative Party, half of whom want to leave”. The PM did not seem to know his own mind on the European issue and had promised a Tory leadership contest in which candidates were likely to vie against one another to be the most extreme on Europe, said Mr Miliband.

“It is a recipe for two years of uncertainty,” he said. “A clear and present danger to British jobs, British business, British families and British prosperity.”

Promising to “build a better country together”, Mr Miliband said: “There are two futures on offer at this election: To carry on with a Conservative plan based on the idea that as long as the richest and most powerful succeed, everyone else will be OK.

“Or a Labour plan, a better plan, that says it is only when working people succeed that Britain succeeds.”

Speaking outside the Cabinet Office, Mr Clegg predicted another coalition, saying: “It’s my view that the era of single-party government is over in British politics.”

The Deputy Prime Minister said: “About the very last thing the country now needs is a lurch to the left or the right and yet that is exactly what the Conservative and Labour parties are now threatening.”

Tories and Labour were offering a choice between “too much cutting and too much borrowing”, said Mr Clegg, adding: “I think what the vast majority of people in this country want is that we keep this country and our government anchored in the centre ground, which is where the Liberal Democrats have anchored the government over the last five years.”

Prerogative to order the dissolution of Parliament no longer rests with the monarch, under new rules fixing each term at five years, but Mr Cameron nevertheless took the short journey to Buckingham Palace to recommend the Queen issue a proclamation summoning the new Parliament on May 18.

With the majority of polls still showing the two established Westminster parties running neck and neck - and one at the weekend giving Labour a four-point lead - increasingly bitter blows are being traded over the implications for public spending and tax in each of their deficit reduction plans.

Conservatives released calculations which they claimed show that every working household’s tax bill could rise by £3,028 a year if Labour returns to power.

The figure is based on comments made by Mr Miliband in 2010, before he became Labour leader, which Tories claim indicate that he would favour using an equal mix of spending cuts and taxes to balance the books.

Shadow chief secretary to the Treasury Chris Leslie said: “These are totally made-up figures from a desperate David Cameron who has raised taxes on working people.”

While Tories claim they will eliminate the deficit without tax rises, by cutting back on welfare benefits and public spending and cracking down on tax avoidance, Labour has said taxation will play a part in its effort to balance the current budget by 2020.

Labour is committed to restoring the top 50p rate of income tax for salaries over £150,000, but shadow chancellor Ed Balls has ruled out raising National Insurance, the main rate of VAT or the basic or higher rates of income tax.

Mr Leslie said: “Under the Tories, families have lost over £1,100 a year on average from tax and benefit changes, while millionaires have been given a huge tax cut.

“Labour will reverse the Tory tax cut for millionaires and cut taxes for millions on middle and low incomes through a lower 10p starting rate of income tax.”

Ukip leader Nigel Farage brushed off the UK Independence Party’s recent dip in the polls, insisting that he expects to win “a good number of seats” at Westminster on May 7.

Mr Farage - who will set out his party’s key election pledgelaters - said any Ukip MPs elected to Parliament would see it as their job to ensure that the referendum on Britain’s EU membership promised by Mr Cameron for 2017 is not “kicked into the long grass”.

“Our job in the next Parliament would be to hold his feet to the fire, to make sure that the referendum is not a stitch-up,” the Ukip leader told ITV1’s Good Morning Britain.

“I don’t want this to be kicked into the long grass until the end of 2017. I think it should be before the end of this year.”

Meanwhile, Green Party leader Natalie Bennett launched an appeal to voters who are “sick of business-as-usual politics and desperate for change”, promising that her party would offer “a real alternative to the politics and economics espoused by establishment politicians for decades”.