It has been revealed Ms Blears claimed for expenses on three homes in a year
Cabinet minister Hazel Blears says she understands why people "hate" MPs' expenses amid questions over the sale of a London flat.
She told the Commons it was her second home - on which she claimed expenses.
But when she sold it she did not pay 40% capital gains tax due on properties not classified as a "main residence".
The Salford MP said she had not broken any rules but the system was "wrong". A new audit body for MPs' expenses is expected to be ratified on Monday.
Labour MP Sir Stuart Bell told the BBC: "Tomorrow when the House comes back there will be a certain contrition that we have lost the confidence of the public and we need to get that back."
He said a new independent audit had already been agreed and would be ratified on Monday but they would go "one step further" and set up an independent body to validate MPs expenses which he hoped would eventually be "hived off" to the private sector.
Ms Blears' claims were published in the Sunday Telegraph - as the newspaper group continues its revelations of claims made by MPs under their controversial second home allowance.
It has concentrated on claims by Labour ministers so far - although it also reports that the Conservative former minister John Gummer claimed public money to have moles removed from his country estate.
It also reports that Sinn Fein MPs, who do not attend Parliament, claimed nearly £500,000 in second home expenses.
I understand entirely why the public hates this. The system is wrong
The newspaper has already reported that Ms Blears changed the property she designated as her "second home" twice in a year - between a home in her Salford constituency and two London flats.
On Sunday, the newspaper reported she had claimed a flat in south London was her "second home" - for which she could claim expenses - and claimed £850 a month towards mortgage payments.
But when she sold it for a £45,000 profit four months later, she did not pay the 40% capital gains tax then charged on the sale of second homes. A spokesman said there was "no liability" for capital gains tax from the sale.
Sinn Fein claims
Ms Blears has denied any wrongdoing and said she complied with the rules. But questioned outside her Salford home on Sunday, she added: "I understand entirely why the public hates this, right. The system is wrong. It needs to be changed."
Conservative defence spokesman Liam Fox told the BBC ministers used to have to claim their main home was in London - but that had been changed under Labour. "It seems to me there has to be hard and fast rules about what is your primary home," he said.
The public think the rules are wrong and ... go way beyond the legitimate needs of people who have to be in London to represent their constituents
Liam Fox Conservatives
He said he was not concerned about Conservative expenses claims - due to be published next week - and MPs would have to answer for themselves.
"The trouble is that politicians have tended to say 'well, we are only acting within the rules'," he said.
"But the public think the rules are wrong and ... go way beyond the legitimate needs of people who have to be in London to represent their constituents."
The Sunday Telegraph reports that five Sinn Fein MPs have claimed a total of almost £500,000 in second home expenses - despite the party not taking up its Commons seats.
'Do not profit'
A Sinn Fein spokesman denied that the MPs, including president Gerry Adams and Northern Ireland deputy first minister Martin McGuinness, had done anything wrong.
"It is widely known that Sinn Fein MPs travel regularly to London on parliamentary business and utilise the accommodation that we rent when there," he said.
"We do not purchase properties at public expense and therefore do not profit from the expenses claimed as of right."
Mr Brown says the expenses system does not work and must be changed
Other MPs' claims revealed in the Sunday Telegraph include former PM Tony Blair, former Transport Secretary Stephen Byers, former Home Secretary John Reid and junior ministers Kevin Brennan and Kitty Ussher.
Work and pensions minister Ms Ussher reportedly received more than £22,000 over a 12-month period towards improvements to her home and asked whether she could claim to have "Artex coverings" removed from the ceiling.
A spokesman said the claims had been in line with Commons rules and approved by the fees office and Ms Ussher supported the independent inquiry into "creating a better system for MPs' expenses", due to report back by the end of the year.
The Sunday Telegraph has clarified an earlier report about a £6,577 claim made by Gordon Brown to reimburse his brother for payments to a shared cleaner - saying there was no suggestion "of any impropriety".
Full details of all MPs' claims were due to be published in July after a Freedom of Information battle - but the Telegraph has revealed the information early. The Commons has asked police to investigate the leak .
Meanwhile a survey of 2,246 people, by BPIX for the Mail on Sunday, suggests Labour's ratings have slumped to just 23% - lower than when Michael Foot was party leader in the 1980s.
A YouGov poll of 2,209 voters for the Sunday Times suggested Labour's support had dropped by seven percentage points to 27% - 16 points behind the Conservatives.
Energy Secretary Ed Miliband told the BBC having a bad week was "part of being in politics" and said Gordon Brown was the right man to lead Labour through the next general election.
But he said the focus on expenses was "profoundly depressing" and said the system had to change.
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