Prime Minister David Cameron said Britain would have a special status in the EU following his renegotiations with the bloc which brought "concrete reforms" for Britain's membership.
"Our special status means we can have the best of both worlds," Cameron said. The UK would be exempt from "ever closer union" within the EU, he added.
In what was seen as the key speech of his leadership of the Conservative government, Cameron said in the House of Commons on Monday that it was no longer just a multi-speed Europe, but that countries were heading to different destinations.
Cameron cautioned: "Leaving Europe would threaten our economic and our national security" and be what he described as a "leap in the dark."
No second vote
In a comment directed at London Mayor Boris Johnson, Cameron said there would be no second re-negotiation or second referendum on staying in the European Union. Such a suggestion was, he said, "For the birds."
Some supporters of a "leave" vote, including Johnson, suggested that Britain would be able to negotiate new and more favorable terms with the bloc after a vote to exit.
Two-year exit process
If Britain voted to leave, Cameron said, he would use the article 50 procedure under the Lisbon treaty to initiate exit. Once this started, after two years Britain would automatically leave the EU unless all member states agreed to extend the time period.
Among the reforms Cameron said he had spent the last nine months working on were protection of the pound and ensuring that there could be no discrimination against Britain. British taxpayers would not have to pay to bail out the eurozone and the eurozone would not be able to act as a bloc against British interests - such as banks being forced to relocate to eurozone countries.
With the referendum date confirmed, traders warned that the pound was set for four months of volatile trading.
The value of the UK currency has been steadily declining against the US dollar since the end of 2014. The pound fell to $1.4106 and 1.28 euros in Monday trading.
While bookmakers shortened the odds on a vote to leave, they still favor a "remain" victory.
Moody's, which assigns scores to governments' creditworthiness, said the EU deal reached by Cameron would help to alleviate some uncertainty around Brexit but that the outcome of the 23 June referendum "remains too close to call."
"The outcome of the referendum remains wide open. In our view, a decision to leave the EU would be credit negative for the UK economy," said Kathrin Muehlbronner at Moody's. It would potentially push up the cost of government borrowing, Moody's warned.
Economists at investment bank Citi raised the probability of Brexit from 20-30 percent to 30-40 percent after Johnson and justice secretary, Michael Gove, were among six cabinet ministers who announced over the weekend their support for the leave the EU campaign. More than a hundred Tory MPs have said they will also campaign to leave.
Citi economists Tina Fordham and Michael Saunders wrote in a research note that " following the decision of credible and popular leaders like Johnson and Gove to back the out campaign, we now increase the probability that the UK votes for Brexit."
jm/rc (AFP, AP)