Prime Minister David Cameron warned on Monday that a vote to leave the EU would risk Britain's economic and national security, as uncertainty over the outcome of the June referendum sent the pound plunging.

In a speech to the House of Commons, the Conservative leader launched a barely-veiled attack on London mayor Boris Johnson, his long-term rival who has come out for a Brexit, accusing him of taking the position for political gain.

As sterling fell to a near seven-year low against the dollar on the currency markets, Cameron told lawmakers that it was time to "properly face up to the economic consequences of a choice to leave".

Eurosceptics say Britain would still be able to trade with the European Union outside the bloc and regain control over laws and borders, but the premier said that this would only be "an illusion of sovereignty".

Cameron also warned repeatedly that the threats of terrorism and Russian aggression in Ukraine meant remaining in the 28-member club was more important than ever, saying: "This is no time to divide the West."

"We are a great country and whatever choice we make, we will still be great," Cameron said. "But I believe the choice is between being an even greater Britain inside a reformed EU or a great leap into the unknown."

Most analysts expect Britain to vote to stay in the EU on June 23 but opinion polls show the public is divided and the declaration of Johnson for the "Leave" camp has boosted its chances.

The pound fell to $1.4058 in early afternoon trading, its lowest level since March 2009, before recovering slightly.

The pound was also under pressure against the euro for much of the trading day.

Simon Smith, chief economist at FxPro, warned uncertainty ahead of the vote would weigh on the currency.

"For sterling, this won't be a fun time," he said.

'No other agenda'

Cameron set out the details of the reforms secured at an EU summit in Brussels last week, which he argues give Britain "special status" and are enough reason to vote to stay in.

He is facing a major challenge in Johnson, a charismatic figure who manages to reach across the political divide and is tipped as a future prime minister.

Johnson's announcement on Sunday that he would back a Brexit boosted the "Leave" campaign, which until then had been marred by infighting and a lack of leadership.

He said the EU project had "morphed and grown in such a way as to be unrecognisable" and that there was nothing xenophobic in wanting to quit.

Six ministers who attend cabinet have already declared themselves in favour of the "Leave" campaign and reports suggest around a third of Cameron's 330 lawmakers could back a Brexit.

The government has played down Johnson's importance, but Cameron used his speech to take two pot shots at the mayor.

The premier emphasised that he has promised not to contest the next election and had "no other agenda than what's best for our country", a reference to speculation that Johnson is backing Brexit as a move on the Tory leadership.

And he condemned the idea that a "Leave" vote could simply be a tactic to win further EU reforms, an idea indirectly referenced by Johnson, as "for the birds".

Security concerns  

No country has ever left the EU and the prospect of a Brexit is posing a major headache for the bloc, already grappling with its biggest migration crisis since World War II.

Britain first joined the then European Economic Community (EEC) in 1973, and in a referendum two years later the public backed membership by just over 67%.

But the country has had a strained relationship with Brussels, opting out of key projects including the euro and the Schengen passport-free zone.

Security is shaping up to be one of the big issues of the campaign, with cabinet minister Iain Duncan Smith warning this weekend that the inability to control its borders made Britain open to a Paris-style attack.

However, the director of the continent's police agency Europol, Rob Wainwright, said the opposite was true.

Benefits of EU membership include "direct access to our database, the ability to involve itself into our intelligence projects and many other areas," he said.