Conservative leader Michael Howard has promised £4bn in tax cuts as campaigning for the next general election gathered pace.
Tory leader Michael Howard said voters faced a clear choice
Mr Howard said his party could cut £35bn from "wasteful" public spending and put it towards frontline services, tax cuts and reducing borrowing.
Labour hit back by claiming the Tory sums did not add up and will not be believed by voters.
The Lib Dems also launched their pre-election campaign on Monday.
Leader Charles Kennedy cited his party's opposition to the Iraq war, ID cards and tuition fees as evidence that the Lib Dems were the "authentic opposition".
The Tories said they could save money by axing 235,000 civil service jobs, 168 public bodies and schemes such as the New Deal.
Mr Howard said voters faced a clear choice at the polls: "More waste and higher taxes under Mr Blair or value for money and low taxes with the Conservatives."
Labour had already raised taxes 66 times and its spending plans spelled danger for the economy, he warned.
The Tories said the bulk of their savings - £23bn - would go into frontline services, particularly health and education.
Another £8bn would be used to plug a "black hole" in government finances and reduce Labour's borrowing, which the Tories say will cause tax rises.
They say there would be £4bn left for tax cuts - although they have yet to specify which taxes would be lowered.
Changes to inheritance tax, stamp duty and altering income tax thresholds to help low paid and middle earning families are being considered.
Mr Letwin said the tax cuts would be targeted at "hard working families and hard pressed businesses".
"These are not vague aspirations, these are absolute commitments," he said, stressing the plans were the result of "tough decisions".
Labour election co-ordinator Alan Milburn accused the Conservatives of producing a "fraudulent prospectus" which would not fool the public.
Robert Jackson's defection was a blow for the Tories
"When they hear Michael Howard promising tax cuts, and promising extra spending on schools and hospitals, they look upwards and see skies full of flying pigs," he said.
"Because they know their sums don't add up. They know the Tories plan massive cuts in public services."
Lib Dem Treasury spokesman Vince Cable branded the Tory package as "fantasy economics".
"These proposals are a dishonest and opportunistic attempt by a party thathas realised that they have no chance of winning the next general election," he said.
The Tory announcement comes it lost MP and ex-minister Robert Jackson, who defected to Labour. On Sunday Mr Howard insisted the move would not influence voters.