Nick Clegg wants cross-party talks on expenses
MPs would be banned from claiming expenses to buy second homes under Liberal Democrat proposals.
Party leader Nick Clegg insisted MPs should no longer be able to make massive capital gains on property purchased with taxpayer support.
Mr Clegg says he wants to present his ideas to the other party leaders as a basis for reforming the system.
Prime Minister Gordon Brown and Tory leader David Cameron say they also back reform but have not set a meeting date.
Mr Brown has said the system of pay and perks needs to be sorted out "once and for all" but he has urged the public to wait for the outcome of a review by the Committee on Standards in Public Life.
Mr Cameron has said he wants more rapid action and has set out proposals of his own, including replacing the current second homes allowance with a lump sum payment and making MPs make a "proper declaration" as to why they need the money, with fines and suspensions for those who break the rules.
Mr Clegg argues that MPs should only be allowed to claim for the rent on a second home, utility bills and council tax.
He claims the move would put a stop to MPs claiming expenses to cover mortgage interest payments and items of furniture under their accommodation allowance, currently worth £24,222 a year.
That figure would be "substantially reduced", says the Lib Dem leader, while ministers living in free "grace and favour" accommodation would be prevented from claiming for a second home at all.
Many MPs have made tens of thousands of pounds on their taxpayer-funded second homes in the property boom since 1997.
Mr Clegg is understood to be looking at whether at least a portion of those profits should be reimbursed to the Treasury when properties are sold.
However, the issue is complicated by the fact that some MPs who have purchased homes in recent years may be in negative equity.
Other proposals set out by the Lib Dem leader include limiting car mileage claims for travelling between constituencies and Westminster to the cost of a standard open return train ticket.
He also believes there should be no increase in MPs' salaries - currently £64,766 - while Britain is in recession.
Explaining the proposals, Mr Clegg said: "It is easy enough for politicians to talk about how the current system for pay and expenses needs to be changed, but what people want to know is what we are actually going to do about it.
"This is a set of reforms that I will put forward as the basis of any discussions between myself, Gordon Brown and David Cameron so that we can move quickly towards a sane, transparent and cost effective system of MPs' pay and expenses."
The proposals, which come amid growing public anger about MPs' and ministers' expenses, are set out in full on Mr Clegg's website.
He writes: "The ongoing controversy over the expenses system is having a hugely damaging effect on public confidence in MPs and politics.
"The behaviour of a small minority of politicians has played a major role in this collapse in confidence, but there has also been a collective failure to agree on a system that is seen as fair and transparent."