Powers to make laws on the Welsh language should be transferred to the assembly, but their scope should be more clearly defined, MPs have said.
The Welsh affairs select committee criticised the assembly government's request for the laws to apply to bodies receiving over £200,000 of public cash.
The report says the figure "seems to have been chosen at random".
Welsh Secretary Peter Hain said the committee's views would need "very careful consideration and discussion".
The committee also warn that the type of bodies specified "could lead to inconsistencies in service".
The report highlights the fact that banks and insurance services are excluded from the assembly government's bid, or Legislative Competence Order (LCO) but utilities and telecommunications are included.
It also says more information is needed on the role of a proposed language commissioner in Wales and warns "burdens should not be imposed on smaller bodies, such as charities, NGOs (non-governmental organisations), organisations established by Royal Charter and very small companies".
The committee said the order: "...could be improved by moving away from an exhaustive list of categories and instead specifying the principles that future measures (Welsh laws) would need to meet, for example a test of reasonableness, proportionality and a cost-benefit analysis."
The Wales Office and assembly government will now negotiate any changes to the order.
Mr Hain said: "The committee is calling for a fundamentally different approach to the Welsh Assembly Government's proposed Welsh language LCO and this will need very careful consideration and discussion in the weeks to come."