Shadow chancellor Ed Balls told MPs that if the chancellor George Osborne "intends to go ahead with such an unfair hit on middle and lower income working families while he is giving a £3bn top rate tax cut, we will oppose [it]".
He said Osborne had set out a false choice between strivers in work and shirkers out of work and on benefit, saying 60% of families hit by the tax and benefit changes set out in the chancellor's autumn statement last week were in work. He claimed the average one-earner couple would be £534 a year worse off by 2015 and that striving working families would pay the price for Osborne's economic failure.
Balls said: "These are the very families who pull up the blinds and go to work and, on average, every Tory constituency has over 6,000 of these families who will lose out."
Labour backed its attack by publishing figures showing the number of in-work families likely to be hit by the squeeze on in-work credits dwarfs the size of the Tory majority in its 50 most vulnerable seats.
A Labour source said: "Everyone knows the next election will be a living standards election. George Osborne's strivers' tax is going to hit working families in Tory-held seats. He thought he was playing a clever political game, but instead he is likely to find he has cost the seats of dozens of his colleagues."
Osborne, however, believes Labour will be punished by voters if it rejects the benefits changes in next month's vote because people out of work have received larger increases over the past three years than those in work.
Osborne also pointed out that the autumn statement was helping those people by providing a personal allowance increase, meaning working households would be £125 better off overall.
Ministers believe polling shows most voters want a clampdown on welfare and believe Labour is incapable of taking the tough choices to bring down the deficit.
However, Labour hopes that some of the Tory rhetoric on strivers and shirkers will lose its impact with the spread of universal credit which merges benefits.
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