Mr Clegg said, in the most serious cases, peers should be expelled
Peers convicted of a crime and facing a jail sentence should be expelled from Parliament, Nick Clegg has said.
The Lib Dem leader said there should not be "one rule for lawmakers and another for everyone else".
Calls for tougher rules on peers who do paid consultancy work have followed claims that four Labour peers were ready to take money to help amend laws.
Currently peers cannot be expelled or suspended, only "named and shamed". The four peers involved deny wrongdoing.
In a speech to Unlock Democracy on trust in politics, Mr Clegg says the political system "too often operates on the myth that tradition should somehow always be trusted."
Faith in politics
He says current sanctions are "weak" and, if the peers involved in the most recent allegations were found guilty by a Lords probe, the most they would have to do is apologise.
"This case exposes the extraordinary protection enjoyed by the political class. One rule for lawmakers and another for everyone else," says Mr Clegg.
He called for new laws to allow guilty peers to be expelled.
Lord Snape and Lord Taylor of Blackburn respond to newspaper accusations
House of Lords leader Lady Royall has already said tougher sanctions are needed and Tony Wright, chairman of the Commons public administration committee, said faith in the political process would be diminished without reform.
On Monday, two of the Labour peers at the centre of claims they offered to help amend laws for up to £120,000 defended themselves in the Lords.
The four peers named in a Sunday Times story are former energy minister Lord Truscott; former defence minister Lord Moonie; Lord Taylor of Blackburn; and former Labour whip Lord Snape - all of whom deny any wrongdoing.
The prime minister's official spokesman said Lady Royall had spoken about the situation at Tuesday's cabinet meeting, but it had not been a lengthy discussion.
Mr Wright said he believed Lords reform was vital and needed to happen within months, not years.
There had to be an "agreed framework" governing the relationship between lobbyists, peers and MPs.
"Unless the public can see who is lobbying whom about what, this kind of story will influence people's perceptions of lobbyists and politicians across the board and for the worse," Mr Wright said.
It's important we get something in position to say we have serious sanctions to prevent members of the House of Lords from acting improperly
Lord Goodhart, Lib Dems
Former Lords leader Lord Richard told BBC Radio 4's World at One programme said reforms should be tackled urgently. He said the House of Lords was asked to do the work of a "major" branch of the legislature, based on customs dating back to the 19th Century.
"It is ludicrous the way in which we are expected to work," he said.
"We're not paid and we don't have offices, there's no room for secretaries, we have none of the normal backup that you would expect a legislator to have.
"In those circumstances it is very difficult to see how you can drag the House of Lords into the 21st Century."
Newspaper reports say paid consultancy work is carried out by roughly one in five of the 743 members of the House of Lords.
Liberal Democrat Lord Goodhart, a former member of the Committee for Standards in Public Life, told the BBC it was "permissible" to advise on political issues but the allegations were that some peers were "going beyond advice and giving assistance".
He added: "For the future it's important we get something in position to say we have serious sanctions to prevent members of the House of Lords from acting improperly."
On Monday in the Lords, Lord Snape stood up to "refute" the Sunday Times claims, while Lord Taylor of Blackburn apologised but said he felt he had followed the rules.
A recording was later released on the newspaper's website of Lord Taylor saying some firms paid him up to £100,000 a year adding: "That's cheap for what I do for them. And other companies would pay me £25,000."
Two Lords inquiries have begun, one looking at the claims and another looking at sanctions that can be taken against peers.
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