Australian Prime Minister Kevin Rudd on Sunday named September 7 as election day, hoping to complete a stunning political comeback by keeping the centre-left Labor Party in power three years after it ousted him.

Kicking off an election campaign set to focus on the economy and a decision to send asylum-seekers to Papua New Guinea and Nauru, Rudd met Governor General Quentin Bryce in Canberra to pave the way for the polls.

"It's on. A few moments ago I saw the governor-general and asked that she dissolve this parliament and call the federal election for September 7," Rudd said in an email to Labor supporters.

"Australians now face a choice. And the choice couldn't be starker. I have a positive vision about the country we can be."

Rudd became prime minister for a second time in late June when Labor members of parliament voted to remove the nation's first woman leader, Julia Gillard, in favour of the former diplomat in hopes of saving the party from catastrophic electoral defeat.

Rudd's first prime ministership, which began with his landslide victory over conservative leader John Howard in 2007 polls, ended suddenly in mid-2010 when his Labor colleagues turned on him and voted in Gillard.

Gillard went to the polls shortly afterwards but that vote ended in a hung parliament, and she was forced to form a minority government with the help of several independents.

Mandarin-speaking Rudd had kept the nation guessing on when the 2013 election -- at which voting is compulsory in Australia -- would be held.

He said he knew he was the underdog going up against conservative leader Tony Abbott, a former minister in Howard's government, but the feeling in the community was that a poll should be held.

"This election will be about who the Australian people trust to best lead them through the difficult new economic challenges which now lie ahead," he told a press conference in Canberra at which he announced the date.

"New challenges brought about by the end of the China resources boom."

Treasurer Chris Bowen last week revealed the budget deficit had risen to Aus$30 billion (US$26.7 billion) and revenues were shrinking, as he unveiled a pre-election mini-budget that includes a controversial plan to tax bank deposits.

The government also cut its growth outlook for the fiscal year to June as the mining-driven economy grapples with a slowdown in China that has seen commodities prices tumble.

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