The latest package of proposals set out moves to axe hundreds of peers and introduce elections to the Upper House for the first time.
A new class of Westminster politician on salaries of up to about £60,000-a-year would be created.
But Justice Secretary Jack Straw said the plans were only designed to "generate further debate" about the options available and did not represent a "final blueprint".
Instead, they will feed into a package to be put to voters at the next general election - which is not expected before May 2010 - and introduced in the next Parliament.
The proposals, vociferously opposed by many peers, set out options for electoral systems for a House of Lords which would be wholly or mainly elected.
The Commons agreed last year that it should be 80% or even 100% elected.
It now remains to be decided which proportion will be subject to elections and whether via a first-past-the-post system, alternative vote, single transferable vote or an open/semi-open list system.
The proposals, building on the recommendations of a cross-party group, include the creation of a statutory appointments commission if the 80% elected option is taken forward.
The Government is proposing that, should 20% remain appointed, Church of England Bishops would be able to continue sitting in the Lords.
The remaining 92 hereditary peers, who survived the 1999 House of Lords Act, will be ditched.
Ministers also want the 746-strong Lords reduced in size to 400-450 members, or even lower. The Tories have proposed no more than 300 peers in the Upper House.
The new, elected peers would be elected for a cycle of three terms, of between 12 and 15 years.
For the first time, members of the House of Lords would receive a taxable salary.
The Government intends that it would be less than an MP's (£61,820) but more than that for members of the Scottish Parliament (£53,091).
The moves will also, significantly, break the link between peerages and the right to sit in the legislature, following recent controversies over "cash-for-honours".
The White Paper marks another milestone in the Government's quest to provide a lasting settlement on the vexed issue of reform of the second chamber of Parliament.
MPs groaned in the Commons when Mr Straw, announcing the publication of today's paper, said it was a "considerable achievement" to have "got this far".
Since Labour's election in 1997, there has been a House of Lords Act getting rid of all but 92 hereditary peers after messy compromises in the Commons.
A Royal Commission chaired by Lord Wakeham followed and after that White Papers in 2001 and 2007.
A Commons vote to get rid almost entirely of non-elected peers has met resistance in the Lords.
Mr Straw told the Commons it had never been his intention to legislate during this Parliament.
"The White Paper represents a significant step on the road to reform and is intended to generate further debate and consideration rather than being a final blueprint for reform," he said.
A group of 61 crossbenchers insisted tonight that Mr Straw's proposals were not based on a "consensus".
Baroness D'Souza, who sat on the cross-party Lords reform body, warned that the proposals would allow the second chamber to challenge the primacy of the Commons.
"A largely elected House of Lords will have a deleterious effect on its ability to scrutinise legislation and to hold the Government to account," she said.
"The House would be dominated by party political appointments through party lists which in short will mean less independence, less expertise and less diversity."
She added that elected members of the Lords would not be prepared to defer to the Commons, adding: "The fact is that elected peers will in time demand equality with the Commons."
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