Members of parliament could receive a standard allowance of £40,000 a year on top of their salaries to pay for a second home in London, under proposals to be finalised this week.

A committee of senior MPs, chaired by Michael Martin, the Commons Speaker, wants to add the payment to MPs’ salaries of £61,820.

Under the new arrangement, MPs would be spared the scrutiny that comes with submitting individual receipts for the running costs of their properties.

Critics argue that if the proposed reform is adopted it will amount to rewarding MPs for their recent abuses of the system. MPs have been caught making inflated claims for household goods and gardening services.

The fixed housing allowance would be taxed at source, leaving MPs with a cash grant of about £24,000 a year, close to the current maximum allocation.

The average sum claimed by MPs outside inner London is about £19,000 because many are not entitled to claim the maximum. Under the new proposal, MPs would be on average about £5,000 a year better off, at a total cost of more than £3m a year to the taxpayer.

The committee has drawn up two other options to restore public confidence in the expenses system. One would also impose a £24,000 ceiling, but this would be calculated on a per diem rate linked to an MP’s attendance at the Commons.

The third option would be to retain the current system where MPs submit individual receipts to the Commons expenses department before they are reimbursed, but with closer scrutiny.

The housing allowance was originally intended to compensate MPs with constituencies outside inner London for the expense of paying for accommodation in the capital when they attend the Commons.

Most MPs use the expenses to pay the mortgage or rent on flats or houses in central London and to cover the costs of upkeep and refurbishment. But the system now allows MPs to buy home furnishings, white goods and even iPods. They also receive other allowances for travel, office expenses and staff.

Meanwhile, senior backbenchers are threatening to defy Gordon Brown’s call for restraint on salaries by voting to implement an extra “catchup” pay rise of £650 a year for the next three years.

The Labour party’s backbench “shop stewards” criticised the prime minister’s stance at a meeting on Wednesday.

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