The two parties are “knocking lumps out of each other” in Mid Bedfordshire, where a by-election is taking place on October 19.
Labour say their candidate, Alistair Strathern, is the victim of a “smear” campaign, while the Lib Dems have accused their rivals of “dirty tactics”.
Both sides now fear that they could split the anti-Tory vote in the seat and allow the Conservatives to pull off a morale-boosting win.
Dorries won the seat for the Tories by 24,664 votes at the 2019 election, with Labour second and the Lib Dems third.
The former cabinet minister quit as the local MP earlier this month after she was denied a peerage in Boris Johnson’s resignation honours list.
With Labour continuing to comfortably lead the Tories in the opinion polls, they are the bookies’ favourites to win the by-election.
But the Lib Dems insist they are best placed to defeat the Conservatives after a string of by-election victories in other rural seats over the last two years.
One Tory peer told HuffPost UK: “A colleague told me I needed to go to Mid Bedfordshire to see Labour and the Lib Dems knocking lumps out of each other.”
Shadow science, innovation and technology secretary Peter Kyle, who is running Labour’s campaign in the seat, said he was “angry” at the tactics being used by the Lib Dems.
He said: “We have never once, either online or offline, mentioned the Lib Dem candidate, what we have done is focus on our positive offer for the community.
“The Lib Dems have done nothing other than smear our candidate and lie multiple times about our campaign.
“They have said that we are out of the race based on no polling data whatsoever. Our data shows that the Conservative vote has collapsed and the party that most residents are turning to is Labour, not the Lib Dems.
“I can only conclude that they lack all belief that they can win a campaign based on policies or a vision of the future so they rely on trying to trick voters into voting for them instead.
“People need to see the Lib Dems for what they are and this campaign has exposed that. For a community that’s already experienced the worst in politics in Nadine Dorries, the Lib Dems have sunk even further.”
But Lib Dem MP Helen Morgan, who beat the Tories in the North Shropshire by-election in 2021, said: “Lifelong Conservative voters in Bedfordshire’s rural villages are ready for change, but tell us they will never vote Labour.
“Instead, they are backing the Liberal Democrats to oust the Conservatives, just like they have done in four previous rural by-elections in this parliament, including in North Shropshire.
“We have been shocked by some of the dirty campaign tactics used by Labour in recent weeks.
“Whilst the Labour campaign appears to be run out of London, the Liberal Democrats have selected a local candidate with a campaign being run out of two offices in the constituency.”