Owen Smith, who quit as shadow work and pensions secretary from Corbyn's shadow cabinet last month, joins Angela Eagle in a bid to oust the leader who has become increasingly unpopular within the party ranks.
"Whilst Jeremy is a good man with great Labour values who has done a lot for this party and I think changed the debate in this country about our economy - he's been right about lots of things - but he is not a leader who can lead us into an election and win for Labour," he said.
Yesterday, Labour's National Executive Committee ruled that Corbyn should automatically be in the contest, an issue which had caused much controversy after some MPs had insisted he should be subjected to the same criteria of requiring the support of 51 MPs and MEPs.
The party will announce the election timetable tomorrow but the contest is expected to take two months, with the winner to be announced on the eve of the Labour Party conference on September 24.
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Labour Party members, affiliated trade union supporters and so-called registered supporters are able to vote although there are some key differences from the 2015 contest, which Corbyn won last year.
Nearly 130,000 people have become members alone since the EU referendum. As it stands, they won't automatically be able to take part.
Meanwhile, Eagle had announced her candidature on Monday and has since had her constituency office in Merseyside region of England vandalised.
A spokesperson for the former shadow minister said a brick had been thrown through the window of the office either overnight or on Tuesday morning.
Eagle called on Corbyn to rein in his supporters, saying attacks such as the vandalising of her office were "being done in his name, and he needs to get control of the people who are supporting him and make certain that this behaviour stops and stops now. It is bullying. It has absolutely no place in politics in the UK and it needs to end".
"As someone who has also received death threats this week and previously, I am calling on all Labour party members and supporters to act with calm and treat each other with respect and dignity, even where there is disagreement," he said.
"I utterly condemn any violence or threats, which undermine the democracy within our party and have no place in our politics," he added.