UPDATE: Clive Palmer's foray into federal politics is a problem for Bob Katter and not the Coalition, Opposition Leader Tony Abbott says.
Mr Palmer is reviving the United Australia Party and will stand himself in the Sunshine Coast seat of Fairfax.
But his aspirations stretch far further than simply winning Fairfax - he wants to be prime minister.
Mr Abbott told reporters in Adelaide the billionaire miner, who up until last year was a prolific Coalition donor, was free to harbour such a lofty ambition.
"Anyone is entitled to run for Parliament. Anyone is entitled to aspire to be the leader of this country," Mr Abbott said.
"(But) if you are serious about changing the government you can only vote for the Liberal-National Coalition.
"If you are serious about changing the prime minister, well, there's one candidate."
Mr Abbott also dismissed any suggestion the UAP would further splinter the conservative vote at the federal election.
He said Katter's Australian Party would have more to worry about from Mr Palmer, who tore up his LNP membership following a very public falling out with the Newman government.
But he hinted that neither party was a "serious" option for discerning voters.
"I suspect that if there's another party on the fringe it might compete with Mr Katter's party," Mr Abbott said.
"But I'm very, very confident that the people of Australia are very savvy here and they are going to vote for the people who are serious; they are going to vote for the people who have ... put in the hard yards and can deliver competent, stable and trustworthy government."
Mr Palmer and KAP leader Bob Katter held meetings late last year and earlier this year with the view of forming a coalition.
When asked on Friday whether an alliance with KAP was on the cards, Mr Palmer's reply was a simple "no".
KAP national president Rob Katter welcomed Mr Palmer's decision to form another party, saying it would help break the major parties' stranglehold on Australian politics.
On Twitter, shadow treasurer Joe Hockey described Mr Palmer as a "great bloke" but predicted the UAP would "fail".
It was a view shared by Griffith University political expert Paul Williams, who said Mr Palmer had "an outside chance at best" of winning Fairfax.
"The LNP is still hot favourite to win, especially if Palmer finishes third," Dr Williams said.
"But the uncertainty lies in where Labor finishes. If the ALP finishes third and preferences Palmer above LNP, then Palmer could win.
But I'd expect Palmer to win 20% of primary vote at best, and most of that from LNP."Respected businessman Ted O'Brien will contest Fairfax for the LNP with Alex Somlyay retiring after more than 20 years in the job.
Mr Somylay attracted almost 50% of the primary vote in 2010, with Labor attracting a paltry 27% and the Greens 18%.
Dr Williams said it was unlikely the UAP would become a credible alternative for conservative voters."If Palmer can't win a seat under UAP, it'd be hard to see anyone who could," he said.
"A Galaxy poll last November did see 27% say they would vote for a Palmer party, but these intentions are always inflated when new parties are announced. Support falls away when the hype fades."
EARLIER: Mining magnate Clive Palmer will run for the position of prime minster, standing in the Sunshine Coast-based seat of Fairfax at the upcoming federal election.
The announcement comes after Mr Palmer announced he would register the United Australia Party and gather candidates for the lower house seats and senate to contest the election on September 14.
At a media conference in Brisbane this morning, Mr Palmer said he had also been endorsed at the leader of the party.
Mr Palmer indicated his full-time job was now vying for the Prime Minster position.
"I am running to be the Prime Minister of Australia," he said.
The UAP will contest 150 lower house seats.
"We will be standing in all elections Federal and state, there is no doubt about that," Mr Palmer said.
Former liberal and national party members Susie Douglas and Jim McNally have also broken ranks and joined Mr Palmer's party.
"Clive has a vision for Australia I think we all should have," Mr McNally said.
Last night Mr Palmer took to ABC program Lateline to announce he was forming a political party.
He told Lateline Australia needed a new party "to unite all Australians in a time of crisis to work together".
Mr Palmer said the United Australia Party was a reformation of the party of the same name which governed Australia in the 1930s.
Prime ministers Joseph Lyons, Robert Menzies and Billy Hughes were all part of the original United Australian Party.
"We think we've got some great ideas, we think we can contribute to the debate and hopefully we can get the support of Australians," Mr Palmer said.
"It's not reasonable to say Australians will vote for a party or their votes are locked in before the contest. Let's have the contest, let's have the best ideas out there, let's let the people decide."
Mr Palmer abandoned his lifetime membership of the Liberal-National Party last year after a spat with Queensland LNP leader and Premier Campbell Newman.