The Conservatives are best placed to carry on Tony Blair's public service reforms, the shadow chancellor says.
Mr Osborne says Labour is abandoning the centre ground
George Osborne claimed Gordon Brown, the next prime minister, had "abandoned the centre ground of public service reform to the Conservative Party".
The Tories would therefore have "a great opportunity to improve life for the many, not the few", he added.
But at a hustings event later Mr Brown said there would be "no retreat" from the centre ground of British politics.
Mr Blair has called for personalised services which allow people to choose schools and hospitals.
Mr Osborne told BBC Radio 4's Today programme that Mr Blair's ideas on choice were right, but said he had been wrong to impose them from Whitehall.
He said: "I'm saying work with the public service professionals, work with teachers, work with doctors to give them much greater power over their local services and to give the users of these services... the choice that is the driver of improvement in every other walk of life and can be the driver of improvement in public services.
"The fact that Gordon Brown has abandoned the centre ground of public service reform to the Conservative Party is a great opportunity for us to improve life... for the many not the few."
In a speech later to the Policy Exchange think tank, Mr Osborne said that while the Tories and Mr Blair agreed on "the essentials of the way forward", Mr Brown, due to take over by the end of June, was not part of the "growing consensus".
He said the deputy leadership debates had shown that Labour was poised to move to the left, abandoning the centre ground.
"The roadblocks to reform are being put into place," he said.
But Labour chairwoman Hazel Blears, who is one of six candidates for the deputy leadership, said on Wednesday night she "completely and utterly rejected" Mr Osborne's accusation that the party was "lurching to the left".
"It is the Labour party that is in touch with the ambitions of people in this country," she said.
And Mr Brown told people at the hustings event in Leicester there would be "no retreat" to "soft options" or the failed policies of the past.
"That is what the Conservative Party did and it lost them three elections," he said.
"We are going to stand on our principles and our beliefs and stand firmly in the centre ground of British politics."
The Tories say public services should become less "top-down", with more decisions made locally.
Mr Osborne said they would not limit the number of academies that could be created, they would devolve healthcare budgets to GPs and patients and would offer disabled people a personalised budget to control how the money was spent.
His speech came as the party sought to end the row over grammar schools.
And while Mr Osborne rejected "alternative funding mechanisms like social insurance", Conservative MP Peter Bone wrote an article on his website calling for a system of private health insurance to be brought in.
Mr Bone said that radical reform of the NHS was needed, and "the solution which would provide immediate, quality health care at no large cost to the patient at the point of treatment is compulsory insurance".