Labor leader Mark Latham (left) will challenge John Howard (right)

The presence of Australian troops in Iraq is expected to dominate the polls.

Mr Howard is seeking a fourth term, but faces stiff competition from Labor Party leader Mark Latham, with the two parties level in opinion polls.

"This election will be about trust," said Mr Howard. "Who do you trust to lead the fight on Australia's behalf against international terrorism?"

"Who do you trust to keep the economy strong and protect family living standards?" the prime minister said, speaking after he announced the election date.

Despite close ratings in the opinion polls, Labor has an advantage in second-preference votes, which would give it a crucial edge when parliamentary seats are allocated.

Mr Latham has announced he will withdraw the 800-strong Australian contingent from its role supporting US forces in Iraq, if he wins the vote.

Mr Howard's Liberal/National coalition last won in November 2001, with a strong policy against illegal immigration.

Mr Howard's limousine was seen arriving at the Governor General's residence at 1155 local time (0135 GMT) on Sunday.

Governor General Michael Jeffrey has a largely ceremonial role as the representative of the British monarch, who is the Australian head of state.