The embattled Speaker of the House of Commons, Michael Martin, bowed to widespread criticism today and promised that a review into MPs' expenses would be completed before this summer's parliamentary recess.

In what it labelled a "special report", the Members Estimate Committee also announced that the £250 limit for MPs submitting expenses claims without a receipt is to be cut from the start of the new financial year, even before the review is finished. Mr Martin ordered the review last month after the disclosure that the Tory MP Derek Conway used a Commons staff allowance to pay his son £12,000 a year plus large bonuses for "all but invisible" research while he was a full-time university student. Dozens of other MPs also employ family members at the taxpayers' expense.

But the committee had not been expected to complete its review until the autumn, prompting the accusation that the Speaker was trying to bury the issue. The fact that Mr Martin chairs the committee alongside major party grandees such as Harriet Harman and Theresa May also failed to impress Commons modernisers.

Meanwhile, Mr Martin has himself come under pressure over his own travel expenses and those of his wife, Mary Martin, an issue which prompted his spokesman's resignation at the weekend. The Parliamentary Commissioner for Standards has been asked to investigate whether more than £4,000 spent on taxis for Mrs Martin’s shopping trips amounted to an inappropriate use of public money

In defiant remarks in the Commons yesterday, Mr Martin made clear that he would not be forced out of his office by hostile media coverage, pointedly reminding MPs that they alone had the power to force him out.

But today's statement by the Members Estimate Committee signalled an abrupt change of tack.

The committee said that it had decided to reduce the £250 expenses threshold as a "first step" towards the reform of parliamentary expenses. The new limit has yet to be agreed but it is expected that there will be a significant cut.

It added: “We will complete a report in time for debate in the House in July. All decisions will be made by the House itself."

The committee said that its first priority was to consider “radical options” for restructuring the system of pay and allowances. “We are conscious of the need to establish a structure which will endure and will rebuild confidence,” it said.

The committee will then go on to consider how to put in place a “robust and transparent process” for claiming and auditing allowances. It has instructed the Commons Department of Resources to draw up a series of options for change in consultation by the Whitehall spending watchdog, the National Audit Office.

The committee said that it would be drawing on the practices from other organisations in the UK and from other parliaments elsewhere, while seeking briefings from the NAO, HM Revenue and Customs, the Audit Commission and private accountancy firms.

“These will help identify a new system which is workable, in line with practice elsewhere and able to command public respect,” the report said.

Philip Webster, Political Editor of The Times, said that Mr Martin had clearly been stung by the criticism over the weekend.

He said: "One of the big problems has been that the House felt his own inquiry, which was due to report in the autumn, was looking very laggardly. It sounded like he was trying to kick it into the long grass.

"This is an attempt to say, 'We are going to be a serious committee. Don't think we're going to hush it all up.' It's very much driven by the Speaker and the criticisms of him."

Webster said that if Mr Martin can complete the review by July then that would also allow him to resign with his dignity intact when Parliament resumes: "He doesn't want to go when people are calling for his head; nor do MPs want him to. If he went in the autumn, the House could be given the chance to elect a new Speaker before the next election."

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