No turning back now: Cameron promises in-or-out EU referendum

David Cameron took the biggest gamble of his political career today with a historic speech offering the British people an in-or-out vote on membership of the European Union.

Throwing down the gauntlet to Berlin and Paris, the prime minister said he would negotiate a more flexible arrangement with the EU which would include the repatriation of some powers – and then put the result to the British people in a simple in-or-out referendum in about five years' time.

"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 EU on these new terms or come out altogether," he told an audience of reporters, diplomats and business chiefs at the Bloomberg offices in London early this morning.

"It is time for the British people to have their say. It is time to settle this European question in British politics.

"I say to the British people: this will be your decision. And when that choice comes, you will have an important choice to make about our country's destiny."

Comment: Cameron will soon come to regret this ill-advised speech

Cameron EU referendum speech in full

Divide and rule: Cameron splits eurosceptics over in-out referendum

Crucially, Cameron pledged to hold a referendum even if he has to enter coalition with another party, confirming the poll will be a red-line issue in any future coalition negotiation.

The speech was received with jubilation by eurosceptic Conservative backbenchers.

"This is the speech I've waited all my adult life to hear from a Conservative leader," Douglas Carswell tweeted.

"Well done to the 81 MPs who voted for In/Out referendum a year ago. Its party policy now."

Cameron's speech also puts Ed Miliband in a precarious position. The Labour leader has not made clear if he will back the demand for a referendum at the next election and can expect a mauling from an excited Conservative party at today's PMQs.

But the Europe speech also opens up a potential can of worms for Cameron, who appeared nervous, rushed and lacking sleep at the speech today.

He was unable to tell reporters if he would support the 'no' camp at the referendum if he failed in his negotiations with Brussels. It is far from clear that other European powers will be willing to engage in detailed negotiations about repatriation of powers amid the eurocrisis.

Those doubts are reflected in the comments of the Finnish ambassador to Britain, Pekka Huhtaniemi, who told after the speech that Cameron's remarks would trigger "uncertainty" among European leaders.

Cameron suggested the new, looser arrangement he will try to negotiate could apply to all EU states in the form of a new treaty, but that he would obviously accept a UK-only arrangement of it came to that.

In a heavily eurosceptic speech, Cameron raised several core problems with the EU, including the threat it faced from emerging economies, the democratic deficit  of the organisation and the failure to see through the logic of the single market.

In a pivotal section which saw the prime minister espouse the philosophy behind euroscepticism, he also denied the existence of a European "demos".

"It is national parliaments which are, and will remain, the true source of real democratic legitimacy and accountability in the EU," he SSWS.

"It is to the Bundestag that Angela Merkel has to answer. It is through the Greek parliament that Antonis Samaras has to pass his government's austerity measures.

"It is to the British parliament that I must account on the EU budget negotiations, or on the safeguarding of our place in the single market.

"Those are the parliaments which instil proper respect – even fear – into national leaders. We need to recognise that in the way the EU does business."

The speech will have been watched with considerable interest in the capitals of Europe, as leaders on the continent discuss how to respond to an announcement which could precipitate fundamental changes for the EU.