Mr Gray said: "I am delighted to welcome Davena Rankin to the Labour party. Davena joined Labour because she knows we are the party that stands up for ordinary working people now facing the onslaught of Tory cuts.
"People in Scotland are furious at David Cameron's government. Even people in the past who backed them are appalled at their slash and burn approach to child benefits, tax credits for working parents and local services.
"Every time David Cameron says 'We're in this together' the more people stare in disbelief."
Miss Rankin refused to comment on her decision but Labour sources said the "tipping point" for the 38-year-old had been proposed cuts for child benefit.
"In the end it has been understanding what life is like for ordinary people that has left her with no option but to switch," one said.
As a trade unionist, single mother and from an ethnic background, Miss Rankin was a rarity in the Scottish Conservatives and was seen as representative of the more diverse party Mr Cameron is trying to create.
Although the 38-year-old is from Glasgow's Drumchapel area, she was a Tory member for most of her adult life and at the 2007 Holyrood election was second on the party's regional list for the city.
However, the Unison branch secretary at Glasgow Caledonian University gained nationwide prominence when she was contested the Glasgow East by-election.
Joining her on the campaign trail, Mr Cameron said she would make a "first class MP" and Glasgow deserves a "local champion".
"That is why I am proud to be in Glasgow to campaign with Davena and Annabel. They have, through words and deeds, shown a remarkable level of commitment and understanding of the challenges ahead," the Tory leader said.
She was also singled out for praise by Michael Gove, the Education Secretary, at a Scottish Conservative conference, when he referred to her as "our superb candidate in Glasgow East".
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