Australia will hold a general election on May 3, Prime Minister Anthony Albanese said on Friday, locking in a showdown over climate action, nuclear power and a runaway housing market.

Albanese's centre-left Labour party took office in May 2022, turfing out a conservative government deeply unpopular after almost a decade in charge.

But initial enthusiasm for Albanese, 62, has evaporated in recent months as the government nears the end of its three-year term.

Polls show him neck-and-neck with right-leaning Peter Dutton, 54, a hard-nosed former detective who wants to cut back on immigration and reverse a ban on nuclear power.

"Over the last few years, the world has thrown a lot at Australia in uncertain times," the prime minister told reporters.

"Because of the strength and resilience that our people have shown, Australia is turning the corner. Now, on May 3, you choose the way forward."

Albanese declared he was "born ready" to deal with climate challenges, tariff turmoil and the long tail of inflation.

And he warned any foreign foes intent on meddling in the election campaign to "back off".

Coal mining-superpower Australia will choose between two candidates with sharply contrasting ideas on climate change and emissions reduction.

Albanese's government has embraced the global push towards decarbonisation, warning of a future in which iron ore and polluting coal exports no longer prop up the economy. (AFP)