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Liberal Candidate Chrystia Freeland celebrates after winning the Toronto Centre Federal by-election in Toronto on Nov. 25, 2013.

MOE DOIRON/The Globe and Mail

Liberal candidate Chrystia Freeland cruised to victory in the Toronto Centre by-election Monday, handily defeating NDP candidate Linda McQuaig.

Ms. Freeland will immediately enter the House of Commons with an important role in Liberal Leader Justin Trudeau's caucus. She has already been named co-chair of his council of economic advisers and is expected to become a prominent voice among Liberal MPs.

The author and former Globe and Mail journalist campaigned on a promise to champion the cause of the middle class. In a riding where middle income earners are in the minority, the issue of growing inequality between rich and poor was a major issue with voters.

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Ms. Freeland arrived at her victory party at the Jack Astor's restaurant at Yong-Dundas Square to the sound of the crowd chanting her name. As she took the stage, barely visible behind the television cameras, Ms. Freeland let loose a triumphant "We did it!"

She called the win a victory for Mr. Trudeau's positive politics. She also said it proves that Mr. Trudeau will be Prime Minister Stephen Harper's principal adversary at the next general election.

"The results tonight in Toronto Centre and across the country show that the Liberal Party is the alternative to the Conservative Party," Ms. Freeland said. "They show that Justin is the leader to form the next government. He has done a terrific job."

Ms. Freeland described the race as fiercely fought. She said the NDP adopted many of the Conservatives' aggressive, sometimes negative, campaign tactics. She accused the NDP of trying to divide the riding between its rich and poor neighbourhoods.

"They tried to say that Regent Park and Rosedale are opposed to one another," Ms. Freeland said. "To that we said 'No," Ms. Freeland said. "We proved you can win taking the high ground."

She also had a message for Prime Minister Harper.

"My message for Stephen Harper is watch out," she said. "We're on the rise, our party is united and Canadians want an alternative to the Conservatives."

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Watch Chrystia Freeland's comments on her election win and warning to Stephen Harper here.

This by-election was seen as a test of Mr. Trudeau's leadership. He and NDP Leader Tom Mulcair are vying to be seen as the main challenger to Mr. Harper and the Conservative Party. Defeat in a Liberal stronghold would have been a serious setback.

Polls heading into Monday's vote showed the NDP had made steady gains on the Liberals over the course of the campaign. Ms. Freeland campaigned right up until the last minute and even enlisted Mr. Trudeau to help with get-out-the-vote efforts on election day.

But once results started rolling in they showed very positive results for the Liberal Party. Ms. Freeland led with 49 per cent of the vote to 36 per cent for Ms. McQuaig with about 80 per cent of polls reporting. Conservative Geoff Pollock had 9 per cent and Green candidate John Deverell 3 per cent.

Ms. McQuaig and her fellow New Democrats put on a brave face after falling short in Monday's by-election, saying they are poised to smash the Liberal fortress of Toronto Centre in the next election.

"The result wasn't quite what we hoped for, but I think we put forward an incredible fight. We always knew this was a Liberal stronghold and that it would be an uphill battle, and it was," Ms. McQuaig said, as supporters chanted her name. "But we fought on. And the real point is what happens in 2015. This was just a trial run."

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The night saw a surge in Liberal support across four by-elections in different parts of the country, but Ms. McQuaig rejected suggestions that Grit Leader Justin Trudeau had finally broken the NDP's momentum.

"In 2011, this riding wasn't part of the orange crush," she said, referring to the massive spike in New Democrat support in the last general election, which gave the party official opposition status for the first time ever. "And we did better than 2011."

Ms. Freeland has lived in the riding for only a few months. She left her job as a senior editor at Thomson Reuters to seek the Liberal nomination and had lived outside Canada for more than a decade.

Toronto Centre has been a Liberal stronghold since the 1993 election, when the party wrestled it away from the Progressive Conservatives. Since then Liberal MPs Bill Graham and more recently, Bob Rae, have typically won the seat with more than 50 per cent of the vote. In the Liberal collapse of 2011 Mr. Rae's majority was reduced by 10 percentage points, but he still won by more than 6,000 votes.

Ms. McQuaig and Ms. Freeland agreed on many of the issues, from the need for more investment in transit and infrastructure, to the need to address income inequality. Both candidates also said housing is a top priority for people living in Toronto Centre.

Ms. McQuaig, the author of a book called The Trouble with Billionaires and Ms. Freeland, author of Plutocrats, made income inequality the unlikely focus for a by-election.

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It proved to be an issue well-suited to the extremes of the riding. From the wealthy neighbourhood of Rosedale to the low-income St. James Town, the riding is marked by stark differences.

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