THE Dunfermline by-election campaign has flared into life in its final week amid claims Labour "hit the panic button" with a ­leaflet which denied much of the party's austerity proposals.

The Labour campaign has hit back at SNP leaflets focusing on the possible cuts which are being examined by leader, Johann Lamont's policy review which is looking at scrapping free universal services and the council tax freeze.

Labour are the bookmakers' favourites to win on Thursday but the SNP campaign has been solid behind its candidate, former MSP Shirley-Anne Somerville.

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She said of the Labour leaflet: "It seems that Labour are so proud of the SNP's achievements for the people of Dunfermline and West Fife villages that they are trying to pass them off as their own.

"The truth of course is that the council tax freeze, no bridge tolls, free personal care, no tuition fees, free prescriptions, and free bus travel for the over-60s are all threatened by Labour - and can only be protected by voting SNP on Thursday."

The leaflet being distributed by Labour backs policies delivered or supported by the SNP and which are all threatened to some degree by the review established last year which is being led by ­Professor Arthur Midwinter of the University of Edinburgh.

In addition to the council tax freeze, it is also examining free bus passes for over-60s, free prescription charges, the lack of bridge tolls, and free personal care.

It is a two-horse race in Dunfermline, where the SNP are suffering in a former Labour and Liberal Democrat seat from the behaviour of former SNP MSP Bill Walker, who resigned after being convicted as a serial domestic abuser.

However, Ms Somerville, a former MSP, has been chipping away at the whole basis of Labour's "Cuts Commission" by implying areas of spending that are not "off the table" under that review.

Labour have admitted that "nothing is off the table" in its examination of policies such as the council tax freeze, free prescriptions for all and free university tuition.

The SNP's Dunfermline campaign director Bruce ­Crawford MSP said: "Labour have pressed the panic button in Dunfermline.

"This must be the most ­desperate and misleading leaflet ever produced in an election campaign.

"It is clear that Labour are panicked by the reaction they are receiving on the doorsteps from people in Dunfermline and West Fife about their threats to vital public services, and school closure plans. Labour need to withdraw this desperate leaflet. They must pulp the fiction."

A Scottish Labour spokesman said: "This leaflet is simply a restatement of facts, however inconvenient these are to the SNP. Scottish Labour has responded to the most negative campaign any of us have seen by the SNP.

"The SNP have spent five weeks trying to scare the people of Dunfermline. Independence was meant to be a centrepiece of their campaign, but it's now been dumped by the SNP who know that people here oppose their plan to break up Britain.

"Their latest attack is simply a reflection that they are losing the argument with the voters of Dunfermline."

However, the SNP claim that this late intervention in the campaign shows signs of panic and calls into question Ms Lamont's stance in her wider moves to curtail public spending.

They say it further ties the hands of Professor Arthur Midwinter as he looks for areas of spending which could be trimmed by Labour if the party gets into power at Holyrood.

It was this exercise which left Labour open to the accusation that everything from bridge tolls and elderly care to tuition fees and free travel for the elderly were up for grabs.

Some observers fear that Labour's ­intemperate reaction to opposition claims in a by-election which it should have in the bag is creating hostages to fortune for Ms Lamont, particularly in relation to the council tax freeze.