You should inform your manager of the 'ball dropping' situation and delicately let him/her know about the situation. Be specific and use facts + documentation (not emotion, rumors, and your opinion).
Offer to help fix the problem by picking up the ball. BUT, don't do anything unless your manager approves it.
You need to document and CYA, not lay down in front of the train to try to save the day. What is under-performing co-worker learning from this? Nothing.
If your manager has any sense at all, he/she will reward you for your dilligence, and work to develop the skills of the other employee, or find a replacement for them.
Couple of show-stoppers: The manager is a ___hole, the manager is related to or sleeping with your co-worker (or both). Or if there is no trust relationship between you and this manager.
"It's great to soar like an eagle, but weasels don't get sucked into jet engines".
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