Tony Blair says a referendum is to be held on the new European constitution - but he has not named the date for a poll.
Mr Blair has bowed to pressure
For months the prime minister has denied the need for a vote, but on Tuesday he conceded it was time to "let the people have a final say".
He said MPs would debate the issue ahead of any poll - which is unlikely to be before the next general election.
But Michael Howard asked the PM: "Who will ever trust you again?"
A referendum on a constitution would be the first major gauge of public opinion on the EU since the 1975 referendum on whether Britain should stay in the Common Market.
Outlining his radical U-turn, Mr Blair told MPs it was time to resolve "once and for all" whether Britain wanted to be at the centre of Europe or not.
In a Commons statement, he said Parliament should debate the constitution question "in detail and decide upon it" and "then let the people have the final say".
"The question will be on the treaty, but the implications go far wider," he said.
He said a referendum campaign would expose the "true agenda" of the Eurosceptics.
"Let those of us who believe in Britain in Europe not because we believe in Europe
alone, but because we believe in Britain, make ours.
"Let the issue be put. Let the battle be joined," he added
The prime minister spent much of his statement attacking the "myths" surrounding the EU constitution, such as the Queen being removed as head of state or Britons being forced to drive on the right.
He said it was time to "confront" this "unrelenting", though "partially ... successful campaign to persuade Britain that Europe is a conspiracy aimed at us, rather than a partnership designed for us and others to pursue our national interests properly".
COUNTRIES HOLDING OR LIKELY TO HOLD A REFERENDUM:
He said the new treaty, needed because of the EU's enlargement from
15 to 25, would be agreed to by the government if it embodied the British position.
Michael Howard, in reply, taunted Mr Blair over his change of heart on the constitution demanding to know if it was a "product of principle or a product of opportunism".
And he attacked the prime minister's assertion that a referendum should only take place once Parliament had voted.
The Tory leader said: "How can the prime minister say trust the people but not just yet?"
And he mocked Labour MPs as being the "loyal foot soldiers of the grand old duke of spin".
Liberal Democrat leader Charles Kennedy welcomed Mr Blair's announcement and told MPs he hoped the referendum question would be an "unloaded, unbiased question, subject to the Electoral Commission".
But he said he hoped the referendum campaign would be more "slick and polished" than the process which led to Tuesday's announcement.
STEPS TO A REFERENDUM
Constitution expected to be agreed in June
Parliamentary approval may be sought before a vote
It could also take place alongside referendums for English regional assemblies this autumn
A vote could also be held at the time of the general election predicted next spring
It is also possible a vote will take place after the next general election
In the past, those hostile to Europe had been "allowed to have too much of the running," said Mr Kennedy.
And he called on Mr Blair to "move quickly to re-establish a pro-European British campaign".
BBC political editor Andrew Marr said Mr Blair would be "very, very badly damaged" if he lost a referendum "and probably would have to stand down".
'No running scared'
Later, Foreign Secretary Jack Straw revealed that the decision had been confirmed only at the weekend but discussed for some time.
But it had not been formally discussed by the Cabinet, he told BBC Newsnight.
Mr Straw said the government would inevitably face criticism for changing its mind.
"It is not a question of running scared at all," he said.
"If you are in democratic politics, you have to take account of what people are thinking and you have to keep listening to people and parties which don't do that fail badly."
Some pro-European campaigners complain the decision is a tactical one to prevent votes being lost in the June European elections rather than a long-term strategy for Britain's relationship with Europe.
The draft constitution was drawn up last year but so far European Union leaders have failed to agree on the final details. They want to reach a deal by the end of June.