Australia's ruling conservative coalition has promised to maintain its commitment to the war on terror.
Polls veer wildly on whether Howard or Latham will win
At the party's official campaign launch in Brisbane, the Prime Minister, John Howard, said Australia stood "proud and tall" because of its economic achievements and its willingness to fight extremism.
Mr Howard, a key ally of the US in Iraq, is seeking a fourth consecutive term in office when Australians go to the polls on 9 October.
There were noisy demonstrations in Brisbane by groups opposed to the government's involvement in Iraq.
Several hundred protesters gathered to vent their frustrations at Australia's military role in the Gulf, chanting "Howard out, end the lies".
The issue has become an important part of the election campaign.
Mr Howard's government has promised to keep its contingent of almost 900 troops in the region indefinitely.
The main opposition, however, has promised to bring most of them home by the end of the year if it wins power.
Launching the party's campaign inside Brisbane City Hall, Mr Howard said the nation's security was paramount.
"Terrorism has cast a dark cloud over the world but it is a challenge that must be repulsed and a challenge best repulsed by us being determined to live the lives of a free and democratic society."
Mr Howard, who has been in office since 1996, said Australians could trust his government to confront the peril of international terrorism.
He went on to say that the decision to commit troops to the invasion of Iraq was the most difficult he had ever made but he insisted it was the right one.
Australia has suffered no combat casualties in the Gulf.
The leader of the opposition, Mark Latham, will outline his vision for the future when the Labour party officially launches its campaign on Wednesday.
The opinion polls bounce around. Some polls put Mr Latham slightly ahead, while another newspaper on the same day will put Mr Howard in the lead.
Bookmakers have Mr Howard make the clear favourite to win re-election.