Smith said that Corbyn was a good man and been proved right about a lot of things including strongly opposing austerity but was “not a leader who can lead us into an election and win for Labour”.
He added: “Working people cannot afford to have a day like today when the Tories are popping champagne corks and celebrating their coronation and the prospect of a Labour government feels so distant.”
But Smith criticised language used by John McDonnell, the shadow chancellor, who branded rebels organising the coup against Corbyn of being “fucking useless” at a rally on Tuesday night – a remark he has subsequently referred to as a “joke”.
McDonnell condemned abuse of MPs by rival Labour supporters on Wednesday morning. “If anyone anybody is engaging in any form of abuse and they say they’re in the name of Jeremy Corbyn, they’re not. They should be out of the party,” he said.
But Smith was scathing about the shadow chancellor. “John McDonnell is part of the problem we have in the Labour party,” he said.
He accused McDonnell of being prepared to see the party split after shrugging in a meeting about the prospect of such a division – an account denied by the Labour leadership.
Smith said he was not prepared to see Labour split, did not take part in a coup orchestrated by those on the right of the party and would never be part of any breakaway faction.
“I can heal this party. I can be a credible Labour leader and the next prime minister,” he said.
The Labour MP has been trying to decide for days whether to join Angela Eagle, the former shadow business secretary, in the contest.
His decision to run comes after Labour’s ruling body, the National Executive Committee (NEC), said Corbyn would automatically be on the ballot without needing to collect nominations from MPs.
In a move apparently prompted by intimidation of MPs and Labour supporters, the NEC also decided to suspend local Labour party meetings for the duration of the contest. The move may be intended to calm tensions at a time when some MPs on both sides have claimed to suffer abuse and death threats.
Eagle had a brick thrown through her office window in Wallasey and had been facing a motion of no confidence by her local party because of her opposition to Corbyn.
Margaret Hodge, the Labour MP who called the motion to exclude Corbyn from the leadership ballot, said she found the “problem with Corbyn and people around him” was that they came into politics to seize control of the machinery rather than change the world.
She told BBC Radio 4’s Today programme that the bullying atmosphere in the party was last seen in the 1980s.
James Schneider, of the Momentum group of Corbyn backers, said his movement was not involved in any of the intimidation which it and the Labour leader have repeatedly condemned.
Smith’s decision to stand could risk splitting the vote against Corbyn unless either he or Eagle pulls out at some stage, although there is an alternative voting system that counts second preferences.
Corbyn is strong favourite to hold on to his leadership after the NEC’s ruling that he did not have to collect support from his MPs, who have passed a no-confidence vote in him.
In a crunch meeting at Labour’s Westminster headquarters on Tuesday, NEC members, including Corbyn himself, voted 18 to 14 in a secret ballot that he was not subject to the rule that forces candidates to show they have the backing of 20% of the party’s MPs and MEPs.
Supporters of Smith, MP for Pontypridd , argue he is a better choice than Eagle because he was not in parliament for the Iraq war and has pitched himself on the soft left of the party. However, backers of Eagle believe she is a strong choice to oppose Corbyn after performing well in PMQs against the prime minister. Many on her team also argue it is time Labour had a female leader.
The contest was formally triggered by Eagle’s entry into the race, meaning there will in effect be a rerun of last year’s hustings over the summer and vote to be announced in September.
However, there is already a row brewing over the rules, as it emerged more than 100,000 new Labour members who have joined in the last six months will have to pay £25 to sign up as registered supporters to vote in the contest during a 48-hour window.
This article was written by Rowena Mason Political correspondent, for theguardian.com on Wednesday 13th July 2016 08.13 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010