MPs will be barred from claiming expenses for second homes and will be limited to employing no more than one family member, under new rules unveiled today.
The new expenses scheme for the House of Commons drawn up by the Independent Parliamentary Standards Authority (Ipsa) will come into effect immediately after the general election and will allow MPs only to claim for rented accommodation.
MPs will not be eligible for accommodation expenses if any part of their constituency is within 20 miles of Westminster or inside a 60-minute commute by public transport.
This will bar 128 MPs in the London area from claiming.
MPs will also be banned from claiming for first-class rail journeys, said Ipsa chairman Sir Ian Kennedy.
Launching the new system in Westminster today, Sir Ian said the maximum MPs will be allowed to claim for accommodation and constituency office costs each year will be cut from £56,915 to £40,957 for MPs outside the London area and from £40,192 to £26,915 for those in and around the capital.
Sir Ian said: "The new system is fair, workable and transparent. It will enable MPs to carry out the job we ask them to do and will provide reassurance and value for money to the tax-paying public."
Sir Ian's scheme rows back in some respects from last year's review by Sir Christopher Kelly, who recommended a complete ban on employing relatives at taxpayers' expense.
The one-employee limit will cover not only blood relatives and spouses, but also live-in cohabitees and financial partners.
Sir Ian said: "No longer will MPs benefit from a slack allowances system. This system brings MPs' expenses into line with those in most other areas of life.
"Expenses will be reimbursed only for legitimate costs, backed up by receipts."
Sir Ian said the scheme represented a "clear break" with the past.
MPs would only would be paid expenses on the presentation of the proof of payment - "no receipt, no payment".
Budgets for staff and office expenses would be capped, with payments being made only against "agreed and justified expenditure".
Sir Ian said the new rules would be operated "entirely transparently".
"Never again will the public be prevented from seeing how their money is being spent by those who they elect to represent them," he said.
He said that, in future, there will be no second homes for MPs. Non-London MPs will be able to claim for rented accommodation on the basis of a one-bedroom flat.
Mortgage interest on existing second homes will be paid for a transitional period until August 2012 rather than the five years Ipsa initially recommended in its consultation document.
There will be additional support for MPs who care for children under five, who are single parents caring for a child until 21, or are caring for a child or adult in receipt of additional support form the state.
MPs will no longer be able to claim for the costs of cleaning or gardening.
MPs will not be able to claim for the cost of their daily commute to Westminster although they will be able to claim for travel to, from and within their constituency.
Some subsistence payments, for items such as food, will continue but there will be no automatic £25 for every night spent away from the main home.
Instead MPs will be able to claim up to £15 for an evening meal - with a receipt - if the House sits after 7.30pm.
On leaving Parliament, MPs will receive "winding-up costs" for two months but the one-off resettlement allowance will be scrapped.
Sir Ian said he did not regard this as expenses but as part of an MP's remuneration. He said that, if Ipsa was subsequently given responsibility for MPs' pay, it would reconsider the matter.
"It is not our job to punish MPs for past wrongdoings which give the public value for money, allow MPs to do their job and which provide for vigilance against abuse," he said.
"The new rules will be fair, workable and transparent. This is a tough settlement but a fair one."