Labour had "let down" 8,000 families in Oldham West and Royton over the Government's proposed tax credit cuts, according to the leader of the Liberal Democrats.
Tim Farron said Labour "don't deserve to represent" the area as he claimed they had failed to stand up for those affected, who he said would be £1,300 worse off a year.
Speaking at the launch of the party's by-election campaign in the constituency, Mr Farron also predicted Ukip would not feature prominently in next month's vote and his was the party that could run Labour close.
The contest on December 3 was triggered by the death of former Labour minister Michael Meacher, who represented Oldham in the Commons for 45 years.
It will be the first by-election for Labour under Jeremy Corbyn, though Mr Meacher increased his majority in May to a very comfortable 14,738.
Mr Farron today met the party's candidate, long-serving Trafford councillor and healthcare professional Jane Brophy, together with local activists and supporters, as he opened the Lib Dem campaign headquarters in Oldham town centre.
He said the main issue on the doorstep would be tax credit cuts which he labelled "George Osborne's poll tax".
"We know the Conservatives won't feature in this by-election but the Labour Party will assume this is theirs to lose and we think that's an arrogant assumption, " he said.
"When they have just let down 8,000 Oldham families and their children, they don't deserve to represent this area.
"Only one party has stood up for those families in Parliament over the last few weeks. That is the Liberal Democrats and Jane Brophy leads the challenge here and I am sure it is going to be a good fight."
He said he did not believe Ukip would mount a serious challenge to Labour because he said it had voted in Parliament for planned tax credit cuts.
He said: "If anybody is going to run Labour close here it will be the Liberal Democrats. The issue on the doorstep is tax credit cuts. We are on the right side of that argument - standing up for local people - and Labour have let them down."
Asked about his first electoral test as party leader, Mr Farron replied: "It's the first parliamentary by-election since the general election but it's not the first by-election. We have had 50, 60, 70 council by-elections and the Liberal Democrats have gained more seats than anybody else, and that might not be something that people would expect to hear but it's the truth.
"That is because when we get our message out there people are really, really keen about joining the fightback and feeling that we need a Liberal voice. And Oldham has proudly been a place where Liberals have fought well and hard for many years and I hope we are going to do so again in this election."
Oldham Council leader Jim McMahon will defend the seat for Labour, while the Tories have selected solicitor James Daly and Ukip is represented by John Bickley, who nearly overturned an 11,000 Labour majority at the Heywood and Middleton by-election last October.