"Nation needs a strong PM, not someone who looks for a safe seat", Kejriwal said while addressing an election campaign rally in Bangalore.
While taking a referendum route, Kejriwal said, "I will contest from Varanasi if people want me to do so".
"My party has said you should take on Modi in the (Lok Sabha) election," Kejriwal said, triggering a roar of approval from the crowd.
Underlining that it was "important to defeat Modi", Kejriwal said: "It is a very big challenge. It is not a small challenge... I am ready to accept this challenge."
But he quickly added that he will visit Varanasi in Uttar Pradesh on March 23 and decide whether or not he must take on Modi after judging the response of the people there.
Speculations were mounting since long as Kejriwal had maintained a suspense whether or not he will take on Narendra Modi in Varanasi.
Kejriwal will visit Varanasi on March 23.
Earlier, AAP leader Manish Sisodia had said that it had been more or less decided that Kejriwal will contest against Modi if the latter is fielded in Varanasi in Uttar Pradesh.
The BJP announced on Saturday that its candidate in Varanasi will be Modi, replacing outgoing Varanasi MP and BJP stalwart Murli Manohar Joshi, who will now contest from Kanpur.
In Bangalore, Kejriwal also said people are tired of all other political parties.
"People are tired of Mayawati and Akhilesh Yadav in Uttar Pradesh, they are tired of Congress, NCP (Nationalist Congress Party), BJP (Bharatiya Janata Party) and MNS (Maharashtra Navnirman Sena) in Maharashtra; in Karnataka, they are tired of both Congress and BJP as well," he said.
"But if you ask people in Delhi, after the 49-day-long rule of AAP, they will say they are going to vote us back in Delhi," he said.
"Wherever you go in India, people are tired of the political parties, they want honest politics," Kejriwal added.
(With agency inputs)