David Cameron and Ed Miliband have been put on the spot over immigration, the EU and spending plans in the first set-piece TV broadcast of the election.
The PM said he had "turned the economy around" while the Labour leader said he was "tough enough" to be PM.
Jeremy Paxman began the Channel 4/Sky programme by grilling Mr Cameron about food banks and zero hours contracts.
Mr Miliband said his relationship with brother David was "healing" after their bruising leadership battle.
At the end of Mr Miliband's interview, host Paxman was caught on microphone: "Are you OK, Ed?"
The programme was not a direct debate between the two leaders. Rather, each man faced a separate interview with Channel 4's Paxman and also answered questions from a studio audience, moderated by Sky's Kay Burley.
Both parties claimed afterwards that their man did best, but an early ICM opinion poll for the Guardian suggested Mr Cameron shaded it, with 54% of of the 1,123 viewers surveyed saying they thought the PM "won".
The debate also proved popular on social media, with the #BattleForNumber10 reaching the top of Twitter's trending list in both the UK and worldwide.
Analysis
By James Lansdale, BBC deputy political editor
It was not a head-to-head debate. But it was a back-to-back job interview and a good one at that.
It gave voters the chance to see the two men who could be our prime minister tested, above all, by Jeremy Paxman's robust questioning.
And both men were revealed to be vulnerable over their records in office and their promises for the future.
David Cameron was forced to admit to his missed targets on immigration and the deficit.
And Ed Miliband was forced into the defensive over Labour's past record on the economy and immigration.
Others will judge who won and lost. The polls said Mr Cameron edged it.
The watching political classes thought Mr Miliband put in a good performance, one that exceeded expectations.
Mr Cameron said he wanted an economy "that does not just look good on the page", and said he could not live on an exclusive zero hours contract, of the kind the coalition government has banned.
He also said:
- When he spoke in support of fired Top Gear presenter Jeremy Clarkson, he had not known what had happened
- He had given an "honest answer to an honest question" when he said he would not seek a third term as prime minister
- A Conservative government would be able to find a further £10bn in welfare savings, but would not specify where they would be made
Asked by an audience member how severe future spending cuts would be, Mr Cameron said they would be "manageable and doable", but that "efficiencies" would be needed.
Mr Miliband, when asked by Paxman whether he was tough enough to be prime minister, responded "hell yes", before adding: "Let them underestimate me".
He said he was "not going to get into a bargaining game" with the SNP's Alex Salmond and that public spending was "likely" to fall under Labour.
During the audience question-and-answer session, he said he believed wealth creation was "incredibly important".
Mr Miliband, who is set to officially launch Labour's campaign with a speech at London's Olympic Park on Friday, also said Labour had been "wrong" in the way it regulated the banks.
He said he did not care when Paxman said he was seen as a "North London geek" and added: "I don't care what the newspapers write about me, because what I care about is what happens to the British people, and I know that this country could be so much better."
Meanwhile in the "spin room" alongside the studio, party heavyweights and journalists watched the action before giving their version of events.
Former Conservative leader William Hague said Mr Cameron had "got the economic message across from beginning to end and that is the central message in this election."
But Labour's general election co-ordinator Douglas Alexander said the performances of the two leaders "explains why David Cameron has been so keen to avoid a head-to-head" debate.
UKIP leader Nigel Farage, who also attended the event, thought Mr Miliband had shaded it, saying: "Taking policy out of it, on personality, for me, Miliband was ahead."
The schedule
- 26 March: Live question-and-answer programme on Channel 4 and Sky News featuring David Cameron and Ed Miliband, presented by Jeremy Paxman and Kay Burley
- 2 April: Debate with seven party leaders on ITV, moderated by Julie Etchingham
- 16 April: Debate between five opposition party leaders on the BBC, moderated by David Dimbleby
- 30 April: BBC Question Time programme with David Cameron, Ed Miliband and Nick Clegg, presented by David Dimbleby
Education Secretary Nicky Morgan said Ed Miliband had not been clear about his policies on the economy.
But Labour's Jim Murphy reacted with criticism over David Cameron's performance, saying the prime minister "genuinely didn't tell us why we should vote for him the next time round".
The programme - Cameron and Miliband Live: The Battle for Number 10 - was the first of a series of television events agreed by the broadcasters and political parties following protracted negotiations.
Mr Cameron, Mr Miliband and Liberal Democrat leader Nick Clegg will also feature separately in a BBC Question Time special on 30 April, just a week before the nation goes to the polls.
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