Prime Minister David Cameron has committed his party to holding a referendum on whether the UK should remain in the EU in the first half of the next parliament.

This would mean a referendum taking place by the end of 2017 at the latest.

The Prime Minister said his party's next election manifesto would ask voters to give a Conservative government a mandate to negotiate a new settlement with the EU.

Once that settlement had been negotiated he vowed to stage an 'in/out' referendum.

"It is time for the british people to have their say; it is time to settle this question over Britain and Europe," Cameron said in the speech.

He committed himself to keeping Britain in the EU based on successful negotiations with Europe, saying he would fight with "heart and soul" to win the vote.

However, when questioned on whether failure to achieve this deal would force him to vote 'no' in a referendum, the Prime Minister would only say that he went into negotiations with the intention of winning.

He did leave himself room for manoeuvre by failing to specify details of what a new relationship would require.

Cameron did say it would need to include five central tenets.

The first was competitiveness, with the Prime Minister calling for a more complete single market.

He also called for more flexibility, saying the EU must be able to act with the speed and reflexiveness of a network, rather than slowly as a bloc.

"Let us welcome diversity rather than trying to snuff it out," he said.

He said power must be able to flow back to EU member states, not just away from them, saying countries are different and make different choices and "we cannot harmonise everything".

Cameron also demanded more democratic accountability, with a bigger and more significant role for national parliaments, as well as greater fairness to protect the integrity of the single market.

The Prime Minister warned that were the UK to leave the EU it would be a "one way ticket", which could damage the UK's standing on the international stage.

But he added that "it is hard to argue that the EU would not be greatly diminshed by Britain's departure".

"Britain's national interest is best served in a flexible, adaptable, open EU, and such an EU is better with the UK in it," Cameron said.

Labour leader Ed Miliband said the Prime Minister was "weak" and being driven by "party interest".

UKIP leader Nigel Farage, who wants to see the UK leave the EU, said if Cameron was really serious about renegotiation then what he would do is he would invoke Article 50 of the Lisbon Treaty, "which is the only mechanism that exists with the treaties to take powers back".

Related share prices