Labor has launched a large-scale negative advertising assault aimed at undermining voters' trust in Tony Abbott.
Aired from Sunday night, the high-rotation TV ad has the slogan "If he wins, you lose" set against a close-up picture of the Opposition Leader in suit and blue tie.
The ads, which claim that an Abbott government would cut 12,000 jobs, feature the lights going out on families and builds on the theme of "cuts, cuts, cuts" being pushed by Prime Minister Kevin Rudd in his campaigning across the country last week.
Speaking at Westmead Hospital on Sunday, Mr Rudd said a Liberal government would cut 3000 health workers and $1.8 billion from Medicare Locals.
On Monday he will warn that cuts are coming in the seat of Bennelong, home to 10,000 teachers, nurses, doctors, firefighters and other public servants.
Mr Rudd, who returned as leader promising to end the "wall to wall negativity" in politics, plans to defend the ads as being about "accountability not negativity".
The latest round of negative advertising comes as the latest Newspoll survey shows Mr Abbott's Coalition has increased its commanding lead over Labor, 54 per cent to 46 per cent after preferences.
Mr Rudd's narrow lead as preferred prime minister has also sunk. The poll published in The Australian newspaper shows Mr Rudd is favoured by 43 per cent of voters, down three points since the last survey, while those preferring Mr Abbott rose four points to 41 per cent.
However, a senior Labor source said the message from the party's first round of ads about cuts had started to gain traction.
Internal party polling in marginal seats indicates a turnaround from the first week of the campaign despite newspaper polls at the weekend spelling dire news for the Rudd re-election effort.
"We've been picking up a point a night. By the middle of the week we think the complexion of this election will be different, much closer," an ALP source said.
Labor believes the longer the campaign goes on, voters will realise how stage-managed the Abbott campaign is. "We're chancing our arm with him [Rudd], he's out there in the public, Abbott has been put in cotton wool," a strategist said.