The all-party Select Committee on Culture, Media and Sport will call on the Government to give more money to small regional theatre, dance and music projects.
The committee began a full-scale investigation into the lottery funding of dance, music and theatre after public criticism that "high-brow" culture, such as opera, received preferential treatment. The committee will insist that the criteria should include whether the project benefits the community.
That would mean that local projects such as steel bands or amateur dance groups would stand a good chance of obtaining grants because they involve the community.
"An amateur dramatic society in a village in Scotland could benefit because the whole community gets involved, even if it's a bit haphazard," said a committee source. "It's about spreading the money around."
The MPs will stop short of calling for regional quotas, however, because they fear that many good projects based in cities could lose out. They want to promote excellence in the arts, but not at the expense of small projects from other parts of the country.
The committee studied where lottery aid for heritage projects was going and found that many areas in Britain were missing out. Its report will say that the lottery is closely associated with high-profile recipients such as the Royal Opera House, which has received pounds 78m to help rebuild its Covent Garden site.
The report will call for a change in the make-up of the panels that decide who receives lottery grants. It is expected to call for a shake- up in the decision-making process so that smaller local projects have a competitive chance.