All you need to know.....
Q&A: Scottish independence referendum
It came as the UK government insisted it needed to grant additional powers to Scottish ministers to ensure any vote is legally watertight.
So what are the main issues facing Holyrood and Westminster as the issue goes forward?
Where are the origins of the independence movement in Scotland?
The campaign for Scottish home rule began in earnest almost as soon as the unification with England took place, in 1707.
At the time, the view was that Scotland was in desperate need of financial support, but opponents of the move were outraged by claims that the Scots who put their names to the Act of Union were bribed.
Scotland's Bard, Robert Burns, famously wrote: "We are bought and sold for English gold. Such a parcel of rogues in a nation."
Fast forward many years to 1934, and the establishment of the Scottish National Party, created through the amalgamation of the Scottish Party and the National Party of Scotland.
After decades of ups-and downs, the party won its first election in 2007 and, again, in 2011.
How has the independence debate moved on - or not - in recent years?
Scottish devolution in 1999 presented a significant opportunity for the SNP, which, despite having a few MPs, was struggling to make the case for independence at Westminster.
The prime minister at the time of devolution, Tony Blair, was aware of the potential opportunity a Scottish Parliament could give the SNP.
So Holyrood's part first-past-the-post, part PR voting system was intended to prevent any one party (ie the SNP) gaining an overall majority.
This was the case initially - up to the 2011 election there had been two terms of a Labour/Lib Dem coalition and one of an SNP minority government.
The 2011 result blew out of the water the claim once made by Labour veteran Lord Robertson that devolution would "kill nationalism stone dead".
Could the situation now be more akin to comments by another Labour stalwart, Tam Dalyell, who described devolution as "a motorway to independence with no U-turns and no exits?"
Does Scotland want independence?
Hard to say with any great certainty at the moment - while it's probably true to say support has grown, given the election result, a vote for the SNP does not necessarily mean a vote for independence.
Polling expert John Curtice says support for independence is somewhere between 32% and 38% - actually down from where it was at the start of the SNP's last term in office as a minority government.
A YouGov poll conducted in April 2011 put support lower than that - at 28% - with 57% opposed.
One of the reasons voters turned so decisively to the SNP last May was because they wanted an alternative to Labour and to punish the Liberal Democrats at the polls.
There are those who do not support independence, but recognised Alex Salmond was the best candidate for first minister - knowing they had the safety-cushion of voting "No" in the referendum.
In the Scottish Parliament elections of 1999 and 2003, Labour's plan to essentially scare people out of support for independence worked.
Now it seems the public are much less afraid, and, whether or not it's the case that majority support for independence exists, people seem much more willing to put it to the test in a referendum.
There are also many other factors which could affect support for independence - coalition spending cuts and the ability of Scotland to thrive as a small nation during the current global uncertainty, to name but two.
In terms of political backing at Holyrood, the SNP supports independence, as do the Greens and independent MSP Margo MacDonald, a former nationalist politician.
Labour, the Tories and the Liberal Democrats are opposed.
When will the referendum be held?
Previously, SNP leader Alex Salmond was only prepared to say the referendum would be held at some point in the second half of the Scottish Parliament's five-year term.
However, now says he wants it staged in the autumn of 2014.
Mr Salmond's opponents have long said the delay is creating great uncertainty to Scotland and its economy, although the first minister says loads of companies have been happy to invest in Scotland during recent months, including Dell, Amazon and Michelin.
Mr Salmond also said he was sticking to a manifesto pledge on his rough timescale - his opponents say this is because he knows he'd lose if the referendum was held now.
Prime Minister David Cameron has to tread a fine line. He may well think an earlier referendum increases the chances of Scotland staying in the Union.
But if the party, which has just one MP on Scotland, pushes too hard, it risks increasing support for independence, through accusations of a "London/Tory fix".
The SNP now has an overall majority in Scotland - why does it not simply declare independence?
The Nationalists have always taken the view that, on an issue of such significance, it would first need the backing of the Scottish people in a referendum.
It also needs this mandate to negotiate an independence settlement with the UK government.
So what is the UK government's role in the referendum?
Because constitutional matters are not devolved, Scottish Secretary Michael Moore says that any referendum held without Westminster backing would not be legally binding and, therefore, open to legal challenge.
Mr Moore says he recognises the SNP's right to hold the referendum, and wants to work with the Scottish government to ensure the correct powers are in place.
But the SNP has complained that Westminster is only making the offer "with strings attached" and argues it is trying to dictate the terms of a referendum - like the exact date or the content of the ballot paper - which is essentially none of its business.
One string which looks certain not to be attached is the notion of a so-called clarity clause in Westminster's Scotland Bill, to boost Holyrood powers.
The term takes its name from the Clarity Act, a law passed by the Canadian government which laid down detailed provisions for holding a referendum by Quebec, to help ensure the clear will of the people had been expressed.
What does Labour think?
Scottish Labour leader Johann Lamont - who is in favour of a single question - wants the referendum to be held as quickly as possible.
The party is also hoping calls for cross-party talks on the issue may hurry things along.
Henry McLeish, a former Labour Scottish first minister, says he's "concerned" at Mr Cameron's intervention and accused the PM of failing to understand the real issues involved.
He says the choice for Scotland should not be between full independence and the status quo, but a debate about increasing devolved powers for Scotland within the UK.
Can First Minister Alex Salmond refuse to co-operate with a Westminster timetable?
He could. The Scottish government insists it doesn't need any extra powers to hold a proper referendum, so there is a chance it could just go ahead regardless of what the Westminster coalition says.
Essentially the two sides are, for now, locked in a stalemate on the question of legality.
Professor Robert Hazell, professor of British Politics and Government and a director of the Constitutional Unit at University College London, said Mr Salmond had no direct say in what the UK government does because Westminster was "sovereign".
He added: "But he [Mr Salmond] can certainly sit on his hands if the UK government appears to have seized his ball. And the UK government is within very reasonable territory in insisting that a referendum was fair and legal.
"I'm less sure about their [Westminster] right to insist on the timing of the referendum and whether they are right to insist that the referendum is decisive."
How might a referendum work?
MSPs would need to pass a Referendum Bill in the Scottish Parliament.
There would then be a for-and-against campaign, like the one we saw for the AV referendum, before Scots voters went to the polls.
Who would oversee the campaign?
A contentious issue, this, which is gathering steam by the day.
It may seem that the obvious choice would be the Electoral Commission, an independent watchdog with recognised expertise in such issues, and whose values are "fairness, impartiality and "transparency".
But the SNP says the body is accountable to Westminster and not Holyrood and its board are appointed politically.
The Scottish government says it would much rather see a new body set up to keep an eye on proceedings.
Would voters simply be asked whether they wanted independence?
It's nowhere near as simple as that.
Because the Scottish Parliament does, in itself, not have the authority to declare Scotland an independent country, a "Yes" vote in the referendum would mark the start of talks with the UK government.
Of course, if the Scottish people speak up for independence, it makes it all but impossible for Westminster ministers to say: "No, you can't have it."
The SNP had previously indicated the question on the ballot paper would go something like: "The Scottish Parliament should negotiate a new settlement with the British government, based on the proposals set out in the white paper, so that Scotland becomes a sovereign and independent state."
The responses would be "Yes I agree" or "No I disagree".
However, Alex Slamond has now attempted to cut through that discussion, by asking a simple question: "Do you agree that Scotland should be an independent country?".
What about the "second question" and what is devo-max?
In the last parliament, when the SNP was a minority government, it tried to get enough support for a referendum with Lib Dem votes, offering the olive branch of a second question on the ballot paper on increased powers for the Scottish Parliament.
Ultimately, they didn't go for it, citing the offer as a red herring.
The term "devolution max" has reared its head more recently - nobody is entirely sure what it means, but broadly refers to significant new powers for Holyrood, short of independence.
That might include full fiscal powers.
Westminster is thought to favour a straight yes/no vote on independence.
The SNP is of a similar view, but says there is also "a significant body of opinion" in Scotland which wants more powers.
Backing for such a move may also save the SNP from oblivion, should Scots voters say no to independence.
There is also a fear at Westminster that devo-max will be harder to defeat, because it splits the unionist vote and wins over those who otherwise would have said no to full independence.
What happens in the event of a 'Yes' Vote?
Talks would begin with the UK government on a constitutional settlement, based on the SNP's declaration of a popular mandate from the Scottish people.
It's hard to say exactly how things would happen, given this would be new territory, but it's likely the timescale from a "Yes" vote to full independence would be lengthy, given the huge number of issues which would need to be resolved.
Defence would be the main one - especially since Britain's nuclear weapons are based at the Faslane naval base on the Clyde.
It's also clear that, as things currently stand, an independent Scotland would continue to use the pound, at least initially, as its currency.
Mr Salmond would like to join the Euro - but that's not exactly an attractive prospect at the moment.
What happens if there is a 'No' Vote? Would there be another referendum?
Alex Salmond has described the independence referendum as a once-in-a-generation event.
All the parties - unionist and pro-independence - are keen to avoid the situation which has unfolded in the Canadian province of Quebec, where debate over multiple independence referenda over the years has been dubbed the "neverendum".
At worst, a "No" result in the referendum could spell the end for the SNP as a mainstream political force.
It's also likely that focus would shift back to the debate over more powers for Holyrood - with full fiscal autonomy, as opposed to relying on the Treasury block grant, probably becoming a more serious option.
What does the Scottish government do now?
The Scottish cabinet is finalising its referendum document, which will form the basis of a consultation paper to be published later this month, where the public gets a say.
This is the vehicle by which the SNP hopes to demonstrate that there is enough public support for a second question.
But don't expect it to contain a list of possible referendum dates.
What about the alternative debate on more powers for the Scottish Parliament, short of independence?
Westminster is currently considering the previously mentioned Scotland Bill, which will deliver new financial powers worth £12bn, allowing Scotland to control a third of its budget under a new Scottish-set income tax and borrowing regime.
It came about as a result of the Calman Commission to review devolution 10 years on, backed by a vote of the pro-union parties at Holyrood.
The SNP was never keen to engage with the Scotland Bill debate, saying a "pocket money parliament" under Westminster control was not the way forward.