"I am joining the race for presidency," 58-year-old Fonseka told a packed press conference in Colombo.
His announcement that he will be the joint candidate of opposition parties, including the United National Party, sets the stage for a showdown with Rajapaksa, who has called the elections on January 26, 2010, two years ahead of schedule.
Voicing confidence that he will win the polls against incumbent Rajapaksa, the former chief of defence staff, credited with leading the military victory against the Liberation Tigers of Tamil Eelam in May this year, said that foreign observers were the "need of the hour" for monitoring the presidential elections.
"This victory (against the LTTE) does not belong to one family," he said in an obvious reference to the Rajapaksa brothers holding top posts in the country, including Defence Secretary Gotabaya Rajapaksa.
Fonseka clarified that although he had said that historically the country belonged to the Sinhalese, but people of majority should protect the rights of minorities, including Tamils.
The former army chief also complained that his security has been reduced to 25 guards from a contingent of 600 security personnel.
"If I die in an attack on road, hundreds will die along with me," Fonseka warned.
The ex-top General had earlier on Friday said that his goal was to "counter dictatorship" and set up a democratic society free of corruption and terror.
"I have never lost a battle. I can win this one (the presidential polls) too," Fonseka had said addressing the National Lawyers Association.
Fonseka, who quit as chief of defence staff earlier this month, had said the state of affairs in the country prompted him to join politics.
"I did not have any plans to enter politics initially, but the state of affairs within the country has forced me to contest the upcoming presidential election to protect democracy and the rights of the people."
The Election Commission of Sri Lanka, which has over 14 million eligible voters, recently announced that the presidential elections would be held on January 26 next year and the nominations would be accepted on December 17.
Rajapaksa and his allies decided to hold the polls ahead of schedule apparently to cash in on the victory against LTTE, which had one-third of Sri Lanka's land under its control when he took over as president in 2005.
However, the President is expected to face a tough challenge from Fonseka.
UNP's chief and former prime minister Ranil Wickremesinghe had on Thursday announced his party's backing for Fonseka, close on the heels of the radical Janatha Vimukthi Peramuna shifting its support from President Mahinda Rajapaksa to the former army chief.
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