Gordon Brown has said MPs' second homes allowances should be replaced by flat-rate daily Commons attendance expenses.
The prime minister said he wanted a Commons vote next week on the measures to "restore people's confidence".
Several MPs and ministers, including Home Secretary Jacqui Smith, have been attacked for their use of second homes allowances, worth up to £24,000 a year.
But standards watchdog Sir Christopher Kelly, who is holding an inquiry into expenses, warned against a "quick fix".
The government wants changes in place by July - the same month all MPs' expenses claims, with receipts, dating back to 2004 are due to be published after a long battle by Freedom of Information campaigners.
London MPs
Full details of the proposed changes were set out in a written statement to MPs from Commons leader Harriet Harman.
Among them, she said MPs should not be allowed directly to employ staff, instead the House of Commons would be responsible for contracts and salaries.
Instead of the second homes allowance MPs would get a "flat rate" allowance based on attendance at Parliament. It is not known how much it might amount to, but Mr Brown has said the system should be "simpler and less generous".
I believe we have to act urgently with interim proposals to restore people's confidence that MPs are there to serve the public and not themselves
Gordon Brown
In full: MP expenses reform plans
Labour backbencher John Mann told the BBC he believed he would get about £127.50 a day, on days Parliament sits, - based on public sector rates - and said it would save the taxpayer £20m a year. He said it amounted to "a cut" for MPs.
Ms Harman said ministers living in "grace-and-favour" homes would not be able to claim the new allowance.
MPs with constituencies "within reasonable distance of Westminster" will not get extra to pay for London accommodation but will instead get the supplement currently claimed by inner London MPs, worth up to £7,500 a year.
The Committee on Standards in Public Life, headed by Sir Christopher, is due to publish a review of pay and expenses by the end of the year.
But Mr Brown, a succession of whose ministers have been embarrassed by revelations about their expenses claims, said changes had to happen more quickly.
'Lost confidence'
In a video statement on the Downing Street website, he said MPs had to "act urgently with interim proposals to restore people's confidence that MPs are there to serve the public and not themselves".
Mr Brown added: "The issue of expenses is casting a cloud over the whole of Parliament.
"So members of Parliament need to have the humility to recognise that the country has lost confidence in the current system."
David Cameron: 'A welcome U-turn'
Sir Christopher said it was no surprise the parties wanted to deal with it themselves but added: "I have warned on numerous occasions that this is not something that can be solved by a quick fix.
"The fundamental review we are carrying out is still needed and will still go ahead."
Lib Dem MP Nick Harvey, who sat on the committee which last year reviewed MPs' expenses, told the BBC Mr Brown should have waited for that review rather than revealing it "for some sort of political advantage the day before the budget".
He said a flat daily rate that covered MPs' existing rental agreements was bound to be considered "quite high" and people might think paying out a lump sum was "more opaque and secretive" than filing claims for rent or mortgage payments.
Mr Brown has offered to meet Conservative leader David Cameron and Lib Dem leader Nick Clegg in the next week to discuss the proposals.
Expenses revelations
Mr Cameron said the announcement was "a significant and very welcome U-turn" from Mr Brown and said he was in favour of moves to "cut the cost of politics".
He told the BBC: "This is progress but I do worry about this idea of paying MPs a per day amount to turn up and do their jobs. I think that is open to exploitation, there will be loopholes and problems - I will go to this meeting and try to help sort them out."
Lib Dem leader Nick Clegg was also concerned about the proposals for a daily allowance and said every pound claimed should be justified to the taxpayer.
Mr Clegg, a former MEP, told BBC Radio 4's World at One: "This is what they do in the European Parliament and I don't think bringing the Brussels gravy train to Westminster is the answer to our problems."
I don't think bringing the Brussels gravy train to Westminster is the answer to our problems
Nick Clegg
Lib Dems
Calls to reform second home allowances have increased, with revelations about several MPs' use of the money.
Home Secretary Jacqui Smith has apologised for "mistakenly" claiming £10 for adult films her husband watched, and is being investigated after claiming at least £116,000 for her family constituency home in Worcestershire while claiming her "main" home was her sister's house, where she rents a room while in London.
The Parliamentary Commissioner for Standards, John Lyon, has also confirmed he is investigating Leyton and Wanstead MP Harry Cohen, who claims costs for his east London home because he lists a house 70 miles away in Colchester, Essex, as his main residence.
A complaint about Labour minister Tony McNulty, who claimed thousands of pounds in allowances for the house his parents lived in, in his Harrow East constituency, is also being investigated.
The furore over expenses began last year when it emerged Conservative MP Derek Conway had claimed thousands of pounds for employing his two sons as researchers, although they had done far less work than reported by him.
MPs voted last July to keep second home expenses and rejected proposals for a tougher auditing regime.
Mr Brown did not vote, while 33 government ministers backed keeping the allowances.
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Good or bad idea?
The prime minister said he wanted a Commons vote next week on the measures to "restore people's confidence".
Several MPs and ministers, including Home Secretary Jacqui Smith, have been attacked for their use of second homes allowances, worth up to £24,000 a year.
But standards watchdog Sir Christopher Kelly, who is holding an inquiry into expenses, warned against a "quick fix".
The government wants changes in place by July - the same month all MPs' expenses claims, with receipts, dating back to 2004 are due to be published after a long battle by Freedom of Information campaigners.
London MPs
Full details of the proposed changes were set out in a written statement to MPs from Commons leader Harriet Harman.
Among them, she said MPs should not be allowed directly to employ staff, instead the House of Commons would be responsible for contracts and salaries.
Instead of the second homes allowance MPs would get a "flat rate" allowance based on attendance at Parliament. It is not known how much it might amount to, but Mr Brown has said the system should be "simpler and less generous".
I believe we have to act urgently with interim proposals to restore people's confidence that MPs are there to serve the public and not themselves
Gordon Brown
In full: MP expenses reform plans
Labour backbencher John Mann told the BBC he believed he would get about £127.50 a day, on days Parliament sits, - based on public sector rates - and said it would save the taxpayer £20m a year. He said it amounted to "a cut" for MPs.
Ms Harman said ministers living in "grace-and-favour" homes would not be able to claim the new allowance.
MPs with constituencies "within reasonable distance of Westminster" will not get extra to pay for London accommodation but will instead get the supplement currently claimed by inner London MPs, worth up to £7,500 a year.
The Committee on Standards in Public Life, headed by Sir Christopher, is due to publish a review of pay and expenses by the end of the year.
But Mr Brown, a succession of whose ministers have been embarrassed by revelations about their expenses claims, said changes had to happen more quickly.
'Lost confidence'
In a video statement on the Downing Street website, he said MPs had to "act urgently with interim proposals to restore people's confidence that MPs are there to serve the public and not themselves".
Mr Brown added: "The issue of expenses is casting a cloud over the whole of Parliament.
"So members of Parliament need to have the humility to recognise that the country has lost confidence in the current system."
David Cameron: 'A welcome U-turn'
Sir Christopher said it was no surprise the parties wanted to deal with it themselves but added: "I have warned on numerous occasions that this is not something that can be solved by a quick fix.
"The fundamental review we are carrying out is still needed and will still go ahead."
Lib Dem MP Nick Harvey, who sat on the committee which last year reviewed MPs' expenses, told the BBC Mr Brown should have waited for that review rather than revealing it "for some sort of political advantage the day before the budget".
He said a flat daily rate that covered MPs' existing rental agreements was bound to be considered "quite high" and people might think paying out a lump sum was "more opaque and secretive" than filing claims for rent or mortgage payments.
Mr Brown has offered to meet Conservative leader David Cameron and Lib Dem leader Nick Clegg in the next week to discuss the proposals.
Expenses revelations
Mr Cameron said the announcement was "a significant and very welcome U-turn" from Mr Brown and said he was in favour of moves to "cut the cost of politics".
He told the BBC: "This is progress but I do worry about this idea of paying MPs a per day amount to turn up and do their jobs. I think that is open to exploitation, there will be loopholes and problems - I will go to this meeting and try to help sort them out."
Lib Dem leader Nick Clegg was also concerned about the proposals for a daily allowance and said every pound claimed should be justified to the taxpayer.
Mr Clegg, a former MEP, told BBC Radio 4's World at One: "This is what they do in the European Parliament and I don't think bringing the Brussels gravy train to Westminster is the answer to our problems."
I don't think bringing the Brussels gravy train to Westminster is the answer to our problems
Nick Clegg
Lib Dems
Calls to reform second home allowances have increased, with revelations about several MPs' use of the money.
Home Secretary Jacqui Smith has apologised for "mistakenly" claiming £10 for adult films her husband watched, and is being investigated after claiming at least £116,000 for her family constituency home in Worcestershire while claiming her "main" home was her sister's house, where she rents a room while in London.
The Parliamentary Commissioner for Standards, John Lyon, has also confirmed he is investigating Leyton and Wanstead MP Harry Cohen, who claims costs for his east London home because he lists a house 70 miles away in Colchester, Essex, as his main residence.
A complaint about Labour minister Tony McNulty, who claimed thousands of pounds in allowances for the house his parents lived in, in his Harrow East constituency, is also being investigated.
The furore over expenses began last year when it emerged Conservative MP Derek Conway had claimed thousands of pounds for employing his two sons as researchers, although they had done far less work than reported by him.
MPs voted last July to keep second home expenses and rejected proposals for a tougher auditing regime.
Mr Brown did not vote, while 33 government ministers backed keeping the allowances.
--------
Good or bad idea?
