Leicester is three points behind Liverpool, which hosts West Bromwich Albion on Sunday. United is a point behind in third.
The striker kept his cool when through one-on-one and beat goalkeeper Aaron Ramsdale with a confident right-foot finish.
With a third straight win, Leicester went top but could be overtaken if Liverpool win at Manchester City later Sunday.
Vardy had enough time to net his 11th league goal against Arsenal — the most he has scored against a single opponent in the competition.
City’s defense couldn’t handle the pace and movement of Vardy, who won two penalties — converting both of them — either side of a brilliant finish that saw him flick the ball home at the near post with a deft backheel.
Manchester City's Brazilian keeper Ederson won the Golden Glove award after keeping his 16th clean sheet of the season against Norwich City to beat Burnley's Nick Pope to the award.
By netting for the first time since the restart of the league, Vardy also moved back as the outright top scorer in England’s top flight with 21 goals
Jamie Vardy and Harvey Barnes each scored twice as Leicester beat Aston Villa 4-0 at King Power Stadium in the Premier League on Monday.
After being denied a penalty in the first half — and subsequently given a yellow card for diving — Vardy converted a 55th-minute spot kick after Jonny Evans was fouled by Adam Masina.
Leicester dominated the first half with 11 shots to Brighton’s one, and the deadlock was broken in the 64th minute from a quick counterattack in which Vardy set up Ayoze Perez to tap in.
Jamie Vardy scored a goal and assisted one as Leicester confirmed its status as a surprise Premier League title contender with a 2-0 victory at home over Arsenal.
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