Senior Tory Party sources said the by-election would be held by 6 March, giving the Tories a severe test before the Prime Minister calls the general election.
Tony Blair declared: "I am delighted that we are going to have the by- election. We have been pressing for this. The Conservatives have been forced into it.
"The people of Wirral can give a lead to the rest of the country, and they will be choosing between a Conservative Party that really has nothing now to say about the future of this country, and a Labour Party that's got the policies and the energy and the ideas to sort out the issues that this country really needs sorting out."
Speculation on an Easter general election was mounting last night following reports that the Tories are preparing for a large-scale poster campaign in late March.
According to a story in today's Campaign, the trade magazine of the advertising industry, the party has cancelled some site bookings made for late April and early May and has instead brought hoardings for the second half of March and for early April.
The news has fuelled rumours that the election could be announced at the Conservatives' spring gathering in Bath in mid-March and could be held on 10 April. Although party sources are still stressing that the favoured date for the election is 1 May, the day before Good Friday has been mentioned as a possible polling day.
Yesterday's news suggests that at the very least they are keeping their options open in case the Government looks unlikely to survive until May.
Brian Mawhinney, the Tory party chairman, announced yesterday that the Tories would be abiding by the parliamentary convention to hold a by-election within three months of the death of an MP.
Barry Porter, the Tory MP for Wirral South since 1979, died on 3 November last year, leaving the Tories with a dilemma of trying to delay until the general election, or risking a defeat within weeks of the election being called.
The Tories will be defending a majority of 8,183. Party sources denied Labour claims that they had been pushed into calling the by-election.
"Canvass returns in Wirral are very good and quite encouraging. We are doing a lot of work there. We have a team in place. The economy is doing very well. The Prime Minister feels there is a sea change going on in the country.
"He goes out in the country and feels a different mood on the ground to the one at Westminster. He feels there is a very different atmosphere out there. South Wirral could be very uncomfortable for Tony Blair."
It could rank in importance alongside the pre-election by-elections in Hull, Bermondsey and Greenwich.
The last time the Tories held a seat in by-election was in Richmond, Yorkshire, when William Hague, the Secretary of State for Wales, was the victor in 1989.
A victory, even in a safe seat, after a string of by-election defeats, would give the Tories a boost of confidence to take on Labour in the general election, but a defeat, which must be counted as likely, could sap morale before the big battle. However, the Conservatives will be hoping that if they do lose, the swing to Labour will be limited.
The Tory high command was pressing for the by-election to be held before Christmas, to avoid a possible defeat being regarded as a pointer to the general election outcome.
Labour MPs were threatening to move the writ if the Tories delayed any longer. Mr Mawhinney said the Government would abide by the convention but he did not say when the writ would be moved.
Labour claimed the Tories had bowed to pressure. "Privately, they don't want to hold it. They couldn't continue with the embarrassment," said a Labour source. "It is a remarkable opportunity for us."
1992 result: Porter B (Con) 25,590 (50.8%); Southworth H (Lab) 17,407 (34.6%); Cunnife E (Lib-Dem) 6,581 (13.1%); Birchenough N (Green) 584 (1.2%); Griffiths G (NLP) 182 (0.4%)