THE Prime Minister today accepted "in full" the report on MPs' expenses, and promised swift action to reform the system.
The report said MPs should no longer be able to claim for their mortgages or employ family members at the taxpayer's expense.
Sir Christopher Kelly, chairman of the Committee on Standards in Public Life, said that his blueprint was "fair and reasonable" and would bring Westminster into line with other walks of life and other legislatures.
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He acknowledged that his wide-ranging proposals would mean "substantial change" for MPs and said that, where necessary, they should be phased in with a suitable period of transition.
The key recommendations include giving the new Independent Parliamentary Standards Authority (IPSA) the power to determine the pay and pensions of MPs as well as their expenses.
Claims for mortgage interest should be brought to an end with "appropriate transitional provisions" of one more Parliament, or for five years.
The report said that there should be no further capital gains at public expense, and the controversial practice of "flipping" properties should no longer be possible.
Any capital gains made during the transitional period attributable to public support would have to be paid back to the taxpayer.
In future, MPs should only be able to claim for rent or hotel costs, while the expenses scheme should only cover council tax, utility bills, telephone line rental and calls, security, contents insurance and removals at the beginning and end of a tenancy.
The costs of cleaning, gardening, furnishings and other items would not be claimable.
The committee said that MPs with constituencies within "reasonable commuting distance" of Parliament should no longer be able to claim for a second home at all.
It said the practice of MPs employing members of their families should be brought to an end by the end of the next Parliament, or within five years.
In a letter to Sir Christopher Kelly, Gordon Brown said that the new Independent Parliamentary Standards Authority would begin work on the committee's recommendations immediately.
"The vast majority of MPs work extremely hard and are determined to serve the public. The old, discredited and flawed system of expenses has shaken the public's confidence in the conduct of those it elects to serve them," he wrote.
"It is because I know that most MPs want to see the very highest standards in public life that I am determined that we sweep away this old system and introduce a new system and in doing so move back to ensuring the focus in Parliament is on the issues that affect our constituents' lives.
"It is right that this system is not determined, administered or amended by MPs. I therefore agree with your recommendation that it will be for the Independent Parliamentary Standards Authority to implement the new system.
"I accept your report. We need to establish a new system to re-establish trust. IPSA will set to work immediately and we expect they will proceed swiftly to put these changes into effect."
The committee said that only MPs who lose their seats or whose departure from Parliament is "involuntary" should be entitled to claim the resettlement grant. Those who step down voluntarily should receive eight weeks' pay instead.
Removal of the grant should also be a sanction against MPs who are found to have "abused" the system.
The committee said that, in future, all expenses claims should be accompanied by receipts or other documentary evidence which should be published.
It did not recommend a ban on MPs taking outside employment such as journalism, but said that any such activity should be within "reasonable limits" and "transparent", with information available to voters at election time.
"The recommendations for change that we are publishing today aim to strike a balance – on the one hand ensuring that MPs are properly supported and fully reimbursed for necessary costs incurred in doing their important work, and on the other providing strong safeguards for the taxpayer to prevent the abuses of the past," Sir Christopher said.
"Our proposals are reasonable and fair and bring Westminster into line with other walks of life and other legislatures. They recognise the unique circumstances of an MP's life but are shorn of the special features which gave scope for exploitation."
MPs should also be prevented from being an MP at the same time as a member of a devolved administration – known as "double jobbing" – the committee said.
Sir Christopher said the recommendations should be implemented "in full" by the time of the next Parliament and urged party leaders to ensure they were.
The committee's proposals met the three tests set of them of accountability, transparency and reduced cost, he said.
"I recognise that this will be a demanding timetable – there is a lot of work for the new regulatory body to complete – but I see no reason why it should not be achievable if the will and determination are there.
"It is important that they both should. This committee will be watching closely."
A General Election must be held by June next year.
Sir Christopher told a press conference: "There is a risk that, as the impact of the revulsion caused by the Daily Telegraph revelation fades with time, some may be thinking of distancing themselves from their earlier expressed determination to implement our report in full.
"If so, that would, in my view, be an error. The damage that has been done by what has been revealed about past malpractice and about the culture that goes with it has been very considerable.
"I don't believe the trust in those who govern us will be restored unless those in authority show leadership and determination in putting the abuses of the past behind them, however uncomfortable that may be."
In its introduction to the report, the committee said there had been "a profound crisis of public confidence in the integrity of MPs" and warned that restoring trust would be a slow process.
"The public are understandably angry about a major systemic failure in an area where they are justified in expecting the highest standards," it said.
"MPs have been able to misuse for personal gain an expenses regime which was intended simply to reimburse them for the additional costs necessarily incurred in performing their jobs.
"Anger has been fuelled further by a perception that ordinary citizens are subject to restrictions in their own working lives which were not being applied in the same way to MPs, and by the reluctance of the House of Commons as a whole to recognise the need for reform until forced to do so."
The committee said the unwillingness of successive governments to raise MPs' basic pay, even when recommended by independent review bodies, had created a "sense of grievance".
"It has also led to a tendency to regard the expenses system, quite wrongly, as a substitute for higher salaries," it said.
