MPs will have to declare all details of their earnings from second jobs from July 1, after changes to their expenses were approved in an angry and chaotic Commons debate last night.

Those representing seats in outer London will be stopped from claiming the full £24,000 second homes allowance from next year, taking instead the much smaller London allowance, and all claims for expenses, however small, will have to be supported by receipts from July. Plans to make the Commons authorities responsible for employing staff, rather than the MPs themselves, were also approved. MPs will be forced to declare how many hours they work on outside jobs as well as how much they earn.

Gordon Brown said that a long-awaited shake-up of the system was under way after he secured comfortable majorities for the changes. He told Chennel 4 News that they would “save the taxpayer considerable sums of money”.

David Cameron said that Mr Brown’s authority was “ebbing away”, referring to the Prime Minister’s failure to win support for his central plan to scrap the second homes allowance and replace it with payments based on daily attendance at Westminster.

Mr Brown agreed to refer the issue to an independent inquiry headed by Sir Christopher Kelly, chairman of the Committee on Standards in Public Life. He dropped the daily attendance allowance on Monday, less than a week after he announced the proposal on YouTube.

Harriet Harman, the Leader of the Commons, surprised MPs by saying that she would no longer seek a vote on the principles of changing the additional costs system, as the housing allowance is known, and accepted instead an amendment from senior MPs of all parties referring it to Sir Christopher.

The change of heart came after Mr Cameron announced Tory backing for the delaying amendment and Labour whips realised that that spelt defeat for Mr Brown on the second day in a row, after Wednesday’s setback over Gurkhas’ rights to live in Britain.

MPs demanded that other issues, such as declaring details of all earnings, should also be left to the Kelly committee. However, Ms Harman insisted that the public would expect MPs to take action where they could, while leaving other matters to the Kelly committee.

Mr Cameron said: “This was another humiliating defeat for the authority of Gordon Brown. Only a week ago he came up with his big idea on YouTube, which was to pay MPs to turn up and do their job. Today, under pressure from all sides, he had to withdraw any idea that that was going to happen. Authority is ebbing away from this Government by the day.”

The changes are interim reforms pending the report from Sir Christopher, who will look at all aspects of MPs’ allowances and earnings, including those voted on yesterday.

Conservative MPs voiced anger at Mr Brown’s handling of the issue last night and some expressed fury with Michael Martin, the Commons Speaker, for allowing the House to vote separately on a series of reforms. They felt that the decision to refer reforms to the Kelly committee meant that the House should not prejudge him on different items of reform.

However, Downing Street argued that it was necessary for reforms to happen as soon as possible after the political system had been brought into disrepute because of the expenses row.

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