Large parts of England face "months of prolonged agony" with no route out of Covid restrictions and inadequate support, Sir Keir Starmer has said.
The Labour leader accused Boris Johnson of offering Greater Manchester and other regions "grubby take it or leave it deals" and "miserly" financial help.
The prime minister said Sir Keir wanted to "turn the lights out" by plunging the UK into another national lockdown.
He insisted his regionalised approach to restrictions was working.
Speaking at Prime Minister's Questions. Mr Johnson said regions which had entered the strictest tier 3 of restrictions were already making progress and £200bn in support had been available during the pandemic so far.
South Yorkshire announced it would enter the highest tier of Covid measures on Saturday after it accepted a financial and public health support package worth £41m.
But the stand-off between the UK government and Greater Manchester, which will enter tier 3 on Friday, continued after talks on a financial support ended in acrimony on Wednesday.
The Labour leader said thousands of workers on low-incomes in the region would soon be out of jobs but still having to pay their bills - a situation he said could last for months.
Sir Keir contrasted what he said was the PM's treatment of them with the £7,000 a day the government is reportedly paying to private consultants to help improve the NHS Test and Trace programme.
"I really think the PM has crossed a Rubicon, not only with the miserly way he has treated Greater Manchester, but the grubby take it or leave it way in which these local deals are being done.
"It is corrosive to public trust to pit region against region and mayor against mayor, council against council, asking them to trade away their jobs.
"Why can't the prime minister and chancellor understand this and stop bargaining with people's lives, stop dividing communities and provide the support that is needed in Manchester?"
But the PM said the £60m in extra business support which he said had been "turned down" by Metro Mayor Andy Burnham would be distributed to councils in Greater Manchester.
Mr Johnson defended the government's three-tier Covid alert level framework, insisting areas such as Liverpool City Region and Lancashire in tier 3 were already benefiting from the tougher restrictions, which he said would be reviewed every 28 days.
And he said Labour's support for a two-to-three week "circuit break" - similar to that due to come into force in Wales - would be economically damaging and have no clear exit strategy.
"It is the height of absurdity that he attacks the economic consequences of the measures we are obliged to take across some parts of the country when he wants to turn the lights out with a full national lockdown," he said.
A Labour motion calling for standardised criteria for tier 3 negotiations and for workers on the Job Support Scheme - which is designed to support firms still operating but facing lower demand - to be paid at least 80% of their pre-Covid income was later defeated in the Commons by 340 to 261 votes.
The debate was overshadowed by a row involving Labour's deputy leader Angela Rayner, who was rebuked by the deputy Speaker after being accused of calling a Conservative MP "scum".
Dame Eleanor Laing intervened after Christopher Clarkson, the MP for Heywood and Middleton, suggested he had heard Ms Rayner use the word while he was speaking.
The Labour MP for Ashton under Lyne complained that her Conservative opponent had said something inaccurate in his own speech, in which he accused the opposition of opportunism during the pandemic.
But Dame Eleanor told her "we will not have remarks like that, not under any circumstances".
Conservative MPs pressed Ms Rayner to apologise, one suggesting that her remarks had "shamed Manchester", but they were told that the matter had been dealt with.
Despite the comfortable margin of victory in the debate, some Conservative MPs also expressed disquiet at the government's handling of the Manchester negotiations.
Hazel Grove MP William Wragg, one of two Conservatives to vote against the government, said firms required by law to close their doors deserved "every penny of support".
"I wish this could have been done differently and amicably. Do not underestimate the anger felt by the public at this failure," he told MPs.
Ministers have said they will publish details of a "consistent and fair" formula on Thursday on which further support for local councils will be based.
There are two separate streams of government money available to tier 3 regions.
Funds for test and trace and local enforcement are based on a region's population size while the other is a negotiated settlement with central government to provide support for businesses.
The CBI has backed calls for a more uniform approach, saying region-by-region negotiations were a waste of time and delayed money getting where it was desperately needed.
"Trust between central and local government is fundamental to making lockdowns work," said the business group's director general Carolyn Fairbairn.
"Now is the time to press the reset button. National unity is the only way to defeat the virus and protect our economy."