Pressure is growing for a comprehensive overhaul of MPs' expenses after police said they could not investigate disgraced MP Derek Conway.
Derek Conway lost the Conservative whip over the affair
Mr Conway was reprimanded by Commons authorities for paying his student son nearly £40,000 to be a researcher.
Scotland Yard said a "lack of systems" for accounting for MPs' expenses meant it was ruling out an investigation.
Sir George Young, Commons Standards and Privileges Committee chairman, said MPs must "get our house in order".
The Conway case led to renewed scrutiny of the level of public funds available to MPs for expenses.
A Commons committee, which is conducting a thorough review, has already reduced the amount MPs can claim without a receipt from £250 to £25 and promised a "more robust regime for audit".
BBC Westminster reporter Adam Fleming says the committee is now bound to come under even greater pressure to make the system more accountable.
In January, a Commons standards committee said there was no record of Mr Conway's son Freddie, a student at Newcastle University, doing work at Westminster.
But the MP, who has denied any wrongdoing, said his son had worked from a family flat in nearby Victoria.
The Metropolitan Police has said it could not investigate the affair because Westminster did not have a system to account for MPs' expenses properly.
It said the Crown Prosecution Service advised such a situation would "undermine the viability of any criminal investigation leading to a prosecution".
Sir George said the House of Commons was responding to pressure to reform the system.
He said: "I quite understand the public concern following the Conway case. We have got to get our house in order.
"Derek Conway's political career has, in effect, been brought to an end, so it isn't the case that Derek Conway has escaped any punishment at all. He has been dealt with quite severely."
Sir George added that his committee had recommended introducing a new system by 1 April, under which any MP who employed a member of his or her family would have to declare it.
Liberal Democrat leader Nick Clegg said the decision not to prosecute Mr Conway showed there was a need to overhaul Parliamentary allowances.
"The public have the right to expect that their money is being properly accounted for.
"The Speaker's review of expenses must provide the basis for fundamental changes to the system of MPs' allowances."
The Met started an investigation after receiving a letter from Duncan Borrowman, who is the prospective Lib Dem candidate for Mr Conway's Old Bexley and Sidcup seat.
Mr Borrowman, who asked officers to examine whether a fraud had been committed and said he was "disappointed" the inquiry was not pursued further.
Mr Conway was suspended from Parliament for 10 days and ordered to repay £13,161. He also lost the Conservative whip over the affair.
He has said he will stand down from his constituency at the next general election.