Mr Joshi will now shift to Kanpur, where union minister and Congress leader Sriprakash Jaiswal has won the last three elections.
"Grateful to the Party for giving me opportunity to contest the election from the holy city of Varanasi! An honour to contest from Varanasi, (sic)" Mr Modi tweeted soon after the announcement.
Party president Rajnath Singh, who had won the last election from Ghaziabad, will contest from Lucknow, in place of Lalji Tandon. The incumbent party MP had reportedly indicated that he may vacate his seat only for Mr Modi. The constituency is prestigious because Lucknow is the capital of India's most populous state, and because for many years, it was represented by the BJP's gold standard for leadership, Atal Bihari Vajpayee.
The party has fielded senior leader Arun Jaitley from Amritsar in Punjab, replacing former cricketer Navjot Singh Sidhu. Mr Sidhu was reportedly called by the party leadership during the day and offered an option of contesting from three other seats which he refused.
In the 2009 polls, the BJP had managed only 10 seats out of the 80 in Uttar Pradesh. The party hopes fielding Mr Modi from Varanasi will help it draw voters in UP, one of the most crucial states that sends 80 MPs to Parliament.
Sources say Mr Modi might also choose to contest from either Ahmedabad East or Vadodara in Gujarat, his home state. The BJP says the list for Gujarat would be finalised on March 19; the party's senior-most leader LK Advani's seat will also be announced then.
Varun Gandhi, BJP's general secretary, will contest from Sultanpur. His mother Maneka Gandhi will be fielded from Pilibhit, which Varun had won last time.
Former Madhya Pradesh Chief Minister Uma Bharti, who has shifted her base to Uttar Pradesh, will fight from Jhansi.
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