WASHINGTON — John Thune, a former representative from South Dakota who lost a Senate bid two years ago by just 524 votes, intends to run against Sen. Tom Daschle,the Democratic leader, creating a high-profile race that will pit one of President Bush's closest allies against one of his harshest critics.

Thune disclosed his plans on Monday night at a Republican dinner in Lincoln County. In prepared remarks released earlier, Thune fired his first shot at Daschle, though not mentioning the Democratic leader by name.

"Deep down I still have a passion for public service. And for me it's not just about holding an office, it's about making a difference," Thune said, adding, "Ladies and gentlemen, I just flat don't know of a place where I could make a bigger difference or a place that is more in need of bold new leadership than the United States Senate."

The entry of Thune into the race gives Republicans, who are trying to strengthen their hold on the Senate, a strong challenger in a state that already leans heavily in their favor. Thune, who turns 43 on Wednesday, lost to Sen. Tim Johnson in 2002 and runs a consulting business, remains extremely popular in South Dakota. Analysts predict the race will be one of the closest congressional contests of 2004.

"I think it will be a close race," said Jim Meader, a political science professor at Augustana College in Sioux Falls. "I haven't done any polling but my hunch at this point is that Daschle would still be the front runner, and that the outcome of the race could largely depend on President Bush's popularity."

Indeed, each man's relationship with Bush will likely figure prominently into the race. White House officials played a large role in persuading Thune to run in 2002, and Bush campaigned hard for him. As the Senate Democratic leader, Daschle is often in the position of criticizing the president, making remarks that Republicans hope to use against him at home.

Bob Burns, a professor of political science at South Dakota State University, said that if anyone can manage the balancing act of leading the opposition to Bush while representing a state where the president is very popular, Daschle can.

"Sen. Daschle makes very few mistakes," Burns said. "Even though in his role as Senate minority leader he may have to adopt certain policy positions that run counter to majority views in South Dakota, he counters that with support of legislation that is very meaningful to South Dakota, and he also counters it with exceptional constituent services, and also bringing home the bacon."