Ed Balls has warned the Government's deficit reduction plan is "economically unsafe" as he stepped up his campaign for the Labour leadership.
He said the challenge for the winner of the leadership contest would be to "expose the coalition's plans as heartless and wrong-headed".
In a keynote speech in the City of London he said Chancellor George Osborne's plan has as much economic credibility as a "pyramid scheme".
Shadow education secretary Mr Balls warned against rushing to cut spending, claiming even former chancellor Alistair Darling's plan to halve the deficit in four years - backed by Labour leadership rival David Miliband - was "a mistake".
In his speech at Bloomberg's headquarters Mr Balls said the "Tory cuts are not just unfair, but both unnecessary and economically unsafe".
He said Mr Osborne's plans would "suck money" out of the economy by cutting public spending and benefit payments while increasing taxes.
"George Osborne was fond of saying - wrongly - that the Labour government had failed to fix the roof while the sun was shining. What he is now doing is the equivalent of ripping out the foundations of the house just as the hurricane is about to hit."
And he dismissed Mr Osborne's argument that slashing spending and benefits while raising VAT would not hit growth and employment prospects because the private sector would "somehow rush to fill the void".
He said: "This is 'growth denial' on a grand scale. It has about as much economic credibility as a pyramid scheme. For George Osborne, read Bernie Madoff - he'll take your money and take your job, but don't worry, if you wait long enough, he promises you'll get it all back from someone else."
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Mr Balls said Labour's next leader would need to give a "stronger, clearer vision of the fairer Britain we will fight for". "We must persuade people in their heads as well as their hearts to come back to Labour again. And by comparison we must expose the coalition's plans as heartless and wrong-headed," he said.
