The PM earlier visited Governor-General Michael Jeffery, the representative of head of state Queen Elizabeth, to ask for the dissolution of parliament.
The veteran PM is seeking a fifth term in office but analysts predict a heavy defeat after 11 years in office.
Mr Howard, 68, is badly trailing his Labor opponent Kevin Rudd, 50, after nine months of dismal polls.
Economic strength
The BBC's Nick Bryant in Sydney says the PM now hopes to persuade the electorate that voting for Labor would be a gamble with prosperity.
Mr Rudd has promised to withdraw Australian troops from Iraq and sign the Kyoto climate pact.
He has also pledged sweeping reforms to health, education and controversial labour laws introduced by the PM.
Younger voters are said to be angry with Mr Howard for introducing legislation that makes it easier to hire and fire workers.
But Mr Howard will point to the enduring strength of the economy.
The Australian stock market is hitting record highs, while unemployment is at a 33-year low.
"Love me or loathe me, the Australian people know where I stand on all the important issues of their future," Mr Howard told a press conference after announcing the election.
He added: "This country does not need new leadership, it does not need old leadership, it needs the right leadership."
Mr Rudd rallied his supporters with a warning that victory was far from a foregone conclusion.
"To win this election we have to make history," he said. "We have only won twice from opposition since World War II.
"I believe this is going to be the fight of our lives."
Mr Howard's unflinching support for US President George W Bush has proven unpopular with many Australian voters, our correspondent says.
The war and the refusal to ratify the Kyoto Protocol on climate change have found the Liberal Party leader on the wrong side of public opinion, he says.
The PM is even behind in opinion polls in his own Sydney constituency of Bennelong, which he has represented since 1974.
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