Parking enforcement is inconsistent, confused and a mess, MPs have said.
MPs called for a scale of parking penalties
A Commons transport committee report branded it "absurd" that some parking offenders were dealt with by the police and others by local authorities.
And the committee's report said incentive regimes based on the number of tickets issued were "misguided".
The Conservatives said enforcement of fines was "over-zealous" in some areas. Transport minister Gillian Merron conceded the system could be fairer.
Scale of penalties
The committee said that, when looking at parking policies, it had "all too often" found "inconsistent, poor and creaking administration, lack of drive for reform, poor communications, confusion and a lack of accountability".
It called for a "scale" of penalties relating to the "seriousness" of the parking contravention and said wheel-clamping should be used "proportionately".
Gwyneth Dunwoody, chairman of the committee, said: "Our present parking system is, frankly, a mess."
While, the MPs were critical of "decriminalised" local authority enforcement, they were not in favour of handing back control to police forces.
Instead, decriminalised enforcement should be improved and extended throughout the country.
But they said the current system was suffering because there was too much variation in performance between local authorities.
For example, some councils contested just 6% of penalty charge notices which go to appeal, while others contested 56%.
Responding to the report, Ms Merron called for a "more open, fairer system that the motorist knows how to use and how to work within".
She said: "Parking enforcement should not be about raising money but in fact should be about keeping traffic moving."
Shadow transport secretary Chris Grayling also said the system had to be made fairer.
He said the real problem was that local authorities were under "huge financial pressure" and had been given responsibility for parking.
"Some of them have enforced it over-zealously and many private contractors have been far too enthusiastic in terms of giving financial incentives for the number of tickets issued to their traffic wardens."
The Liberal Democrats' Paul Rowen said the system needed to distinguish between serious offenders and "people who just nip to the shops".
Local authorities also came under fire from MPs for not giving drivers enough information on what the parking rules were.
"[This] leaves local authorities open to charges of sharp practice," the committee's report said.
The MPs added that the scale and cost of illegally-parked vehicles had not been estimated for the UK as a whole but was clearly high.
In London, illegal parking costs an estimated £270m a year in additional delays and accidents.
The AA Motoring Trust labelled it a "damning report" and the RAC Foundation called for an end to "the belief that councils are using parking fines to raise revenue".