The Dudley North MP, who quit Labour over a "culture of anti-Semitism", took aim at Mr Corbyn and Shadow Chancellor John McDonnell during a Commons debate on the rule of law.
Delivering a speech from the Labour benches, a furious Mr Austin said they were "completely unfit to lead the Labour Party, let alone our country". He branded them IRA sympathisers and said they were dragging Labour "into the mud".
He also faced up to repeated heckling from Corbynite MP Liz McInnes, responding to cries of "why don't you go over there" and "you're not welcome here" by declaring: "I'm here to represent voters in Dudley".
WATCH Ian Austin's speech here:
As the Labour leader looked on from the frontbench, Mr Austin said: "These are people... the Leader of the Opposition, the Shadow Chancellor... these are people who have spent their entire time in politics working with, defending, all sorts of extremists, and in some cases terrorists and anti-Semities.
"It might be ancient history to the party's new, young recruits, but many people will never forget how they supported terrorists responsible for horrific carnage in a brutal civil war that saw people blown up in pubs, hotels and shopping centres.
"A few weeks after the IRA blew up a hotel in Brighton and murdered five people at the Tory Party conference... the leader of the Opposition invited two suspected IRA terrorists to Parliament.
"When the man responsible for planting that bomb was put on trial, he [Mr Corbyn] protested outside the court. The Shadow Chancellor said, quote, 'those people involved in the armed struggle, people who had used 'bombs and bullets' should be honoured.
"And they have the brass neck to lecture anybody about the rule of law. What a disgrace."
Mr Austin told MPs he had left the Labour Party to "shine a spotlight" on what it has become under Mr Corbyn's leadership.
"And because I regard myself as proper, decent,traditional Labour, not like the extremists who have taken over this party and are dragging it into the mud," he added.
Turning to Labour MPs behind him, he said: "I'm here, because my voters in Dudley North send me here to represent them.
"And my views and the things I stand up for... decency in politics and the rule of law... none of these things have changed, and everyone in Dudley knew exactly at the last election."
Mr Austin added: "There is not a single Labour figure in the past who would have backed violent street protest, as the Shadow Chancellor did when he called for 'insurrection' to bring down the Government, or praised rioters who he said had kicked the 's**t' out of the Conservative Party's offices.
"No other senior figure in the Labour Party's history would have joked about lynching a female MP. They don't believe in the rule of law abroad either. They always back the wrong side, whether it is the IRA or Hamas or Hezbollah who they describe as 'friends'.
"No previous Labour leader would have supported brutal, totalitarian dictatorships like the ones in Cuba or Venezuela.
"And no previous Labour leadership would have allowed a party with a proud history of fighting racial prejudice to have been poisoned by racism... racism against Jewish people to the extent that members have been arrested on suspicion of racial hatred, that the party itself has become the first in history to be investigated under equalities laws.
"These people, and those around them, are a million miles away from the traditional mainstream, decent politics of the Labour Party.
"They have poisoned what was once a great party with extremism. They cannot be trusted with the institutions that underpin our democracy.
"They are completely unfit to lead the Labour Party, let alone our country."
Mr Corbyn had earlier accused Boris Johnson of "threatening an assault upon the rule of law" by refusing to comply with legislation calling on him to ask the EU for another Brexit delay.
Mr Austin's speech was described as "hugely courageous" by Tory MP George Freeman, while former football star Matt Le Tissier tweeted: "Wow, that was brave."