John Edwards and Barack Obama are now in a battle within the battle for the Democratic presidential nomination, trying to get into the best position to knock off front-runner Hillary Clinton and win all-important Iowa.

While Edwards campaigned in New Hampshire on Tuesday, his White House bid rests on a strong showing in Iowa. To win or finish second there, the former North Carolina senator must climb over Obama and become the alternative to Clinton.

That won't be easy. Edwards has lost momentum in Iowa, as demonstrated in last weekend's Jefferson Jackson Dinner, the last big display of candidate support before the Jan. 3 caucuses. The Edwards crowd at the dinner was less than a third of Obama's.

Edwards hasn't led in Iowa since late August when he registered 29 percent to Clinton's 24 and Obama's 22. Of the 11 polls taken since then, Edwards rated second in four, third in seven.

The slide has coincided with Edwards becoming increasingly combative. On Tuesday, he declined to say explicitly whether he would support a Democratic nominee other than himself.

"I fully expect to support the Democratic nominee, and I fully expect to be the Democratic nominee," Edwards said, refusing to get drawn into hypotheticals about Clinton becoming the nominee. "I stand by what I said," he answered when asked about the Clinton scenario.

Edwards denies that he's turned negative, instead describing his performances as passionate about change. The campaign concedes it has lost ground to Clinton and Obama, both of whom ran TV ads this summer and early fall while Edwards husbanded his more limited resources.

Edwards is now on the air in Iowa, and in his latest ad, out Tuesday he issues a threat to Congress.

"If you don't pass universal health care by July of 2009 — in six months — I'm going to use my power as president to take your health care away from you. There's no excuse for politicians in Washington having health care when you don't have health care," he says.

Edwards is reportedly also launching an ad in South Carolina, the first Democrat to start television advertising in the state. Born in the Palmetto State, he trails Clinton and Obama there too. The two candidates have launched radio ads targeting African American voters in the first-in-the-south primary state, but have not turned to television.

Hoping to solidify his growing lead over Edwards, Obama is trying to fill the slot of the sunny, optimistic alternative to the other candidates, the role Edwards occupied in the 2004 campaign in which he finished a surprising second and eventually became the vice presidential nominee.

Obama generally ignores Edwards, but stresses that he's not about to take pot shots at Clinton.

"So I do always get this question — why you instead of Hillary? Or why you instead of Edwards? Or whatever. A lot of times lately it's been Hillary because she's in the national polls she's perceived as the frontrunner. Let me say this — despite the egging on of the national press, I'm not interested in kneecapping Hillary Clinton," he said.

Yet an Obama campaign memo on Tuesday did take a couple shots at the opponents, calling Clinton too secretive and Edwards not reform-minded enough. The memo also described Obama's rivals as fluctuating and divisive.

"The next president must have the ability to unify the country, bringing Republicans and independents together with Democrats to solve the nation's most pressing problems. Obama has a track record and approach suited to this challenge while Senator Clinton is likely to unite the GOP against her candidacy as well as her presidency. And Senator Edwards does not show an inclination toward unity, suggesting compromise is a dirty word," the memo reads.

For his part Edwards says his aggressive style conveys he's more serious about change than Obama, but he suggested he's more interested in taking on Clinton because her positions are more clearly different from his.

"I do think we have a significant difference about what's necessary to bring about change. I think we're in for an epic fight to bring about change," he said.

Edwards finished the 2004 Iowa caucuses with 32 percent, but he polls eight to 10 points below that threshold now. Democrats expect even bigger caucuses attendance this January. That means Edwards not only has to rebuild his original coalition, but expand it against the rising tide of Obama's momentum and Clinton's tenacious endorsement-driven campaign.

FOX News' Major Garrett contributed to this report.