Former shadow work and pensions secretary Owen Smith joined Angela Eagle in seeking to unseat the veteran left-winger, declaring he would be a “radical and credible” leader who could take Labour back into power.
Mr Smith launched his bid the day after Mr Corbyn secured his place on the ballot paper for a contest expected to stretch through the summer, after the party’s ruling National Executive Committee (NEC) ruled that only challengers, and not the incumbent leader, have to collect 51 nominations from MPs.
The Pontypridd MP said it was the right decision to ensure Mr Corbyn could take part in the contest and that it was clear people wanted both access to the single market and controls on immigration.
He added: “And then we should give them another chance. That does mean a second referendum or a general election when the terms are clear.”
Mr Smith went on to accuse some on the right of the party of acting in a way which could “split” Labour.
He said: “I will stand in this election and I will do the decent thing and fight Jeremy Corbyn on the issues, just as he will do with me, and at the end of that I will stand behind whoever the leader is. But I hope and I expect it will be me.”
In January this year, Mr Smith appeared to set his face against a challenge to Mr Corbyn, telling the New Statesman magazine: “Jeremy is going to be taking us into the election in 2020. End of.”
But he said yesterday he had decided to stand for the leadership after seeing a “dramatic collapse of faith and confidence in Jeremy” over “the last couple of weeks”.
There was a “widespread belief now in the party that, whilst Jeremy is a good man with great Labour values who has done a lot for this party and changed the debate in this country about our economy and has been right about lots of things like anti-austerity, he is not a leader who can lead us into an election and win for Labour”, he said.
Mr Smith said the prospect of election victory was “distant” under Mr Corbyn and said he had met him on three occasions – as recently as Monday – in the hope of persuading him to find a compromise to resolve the problem without a “divisive” leadership challenge, but had been rebuffed.
Describing shadow chancellor John McDonnell as “part of the problem”, the former shadow work and pensions secretary said: “To John McDonnell I said I feared he had decided that people in his part of the party wanted to split the Labour Party and he shrugged his shoulders and said ‘If that’s what it takes’.
“I’m not prepared to stand by and let the Labour Party, the party I love and that has been the greatest force for good in this country, split. It cannot happen.”
He vowed: “I will never split the Labour Party. I will be Labour till the day I die and I will stick with my Labour Party throughout.”
Mr Smith said he had never been part of “any plot or coup against Jeremy Corbyn”.
“I refused to have any part in discussions, which have been destructive, from a small group of people on the right who, just like those on the left, it seems to me, are now prepared to let Labour split.”
Mr Smith said Labour members would now have “a chance to hear about how I would be a radical and credible leader of the Labour Party and how I can heal our party”.
The Pontypridd MP is seen as politically to the left of Ms Eagle. But he set out clear dividing lines with Mr Corbyn in his interview, saying he would vote to keep the Trident nuclear deterrent and would oppose attempts to hold Tony Blair in contempt over his decision to go to war in Iraq.
The NEC has set a 12 January cut-off date for new Labour members to have the right to vote in the upcoming leadership election, blocking more than 100,000 who have joined the party since the EU referendum from taking part.
But there is a two-day window next week in which people can secure a vote by signing up as registered supporters for a £25 fee.
Ms Eagle has urged those who want a change of leadership to take advantage of the opportunity.
Mr Smith and Ms Eagle face a fight to overturn grassroots support for Mr Corbyn, who won 59.5 per cent of the first-round vote in last year’s contest after a surge in support from registered supporters.
The MP behind a no confidence motion which Mr Corbyn lost by 172 votes to 40, Dame Margaret Hodge, urged the Parliamentary Labour Party to hold hustings to choose a single “unity candidate” to challenge the leader.
She said “people around Jeremy” were indulging in “a politics of intolerance, bullying and intimidation”, including anti-Semitic e-mails she had received.
“These are people working in Jeremy’s name, they are people around Jeremy,” she told Radio 4’s Today programme. “Far too many individuals, Members of Parliament and others are being intimidated, bullied, harassed, physically assaulted.”
But a spokesman for the pro-Corbyn Momentum group, James Schneider, denied it was behind any bullying.
The timetable for the contest will be published today.