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A Labour plot to suppress the future release of MPs’ expenses has been uncovered by The Times.

As the frenzy over MPs’ claims continues into a fourth day, senior figures from all parties will meet this morning to discuss how to salvage Parliament’s battered reputation and it emerged that the tax authorities are expected to investigate whether MPs have breached the law. Plans to bring in a private-sector company to run the expenses department have raised fears, however, that the move is being used as a smokescreen to suppress future embarrassing revelations.

As the first revelations about Tory claims were published, David Cameron, the Conservative leader, apologised, saying that it was a bad day for Parliament and the Conservative Party. The Daily Telegraph revealed that Alan Duncan, the Shadow Commons leader, claimed more than £4,000 for work on his garden. It also had details of claims from Michael Gove, Francis Maude, Andrew Lansley and Chris Grayling.

Senior Labour figures say that the future privatisation of the Fees Office to process claims would exempt receipts from publication under Freedom of Information rules. This was branded unbelievable and unacceptable by Tony Wright, chairman of the Public Administration Committee.

A former Commons Deputy Speaker took the unusual step of urging Gordon Brown to hold an urgent general election to save the “foundations of democracy”. Lord Naseby, formerly the Tory MP Michael Morris, told BBC radio: “I think frankly, if this runs and runs, then Parliament should be dissolved, I think they have to start again. The Great British public has lost their confidence and I think that it is extremely serious. And if it is that serious then there is only one way of dealing with it, that is to dissolve Parliament.”

Lord Carey, the former Archbishop of Canterbury, said: “The latest revelations show it was not just a few MPs with their noses in the trough, but a culture of abuse.”

The latest wave of disclosures about senior Labour figures included Kitty Ussher, the Benefits Minister, spending £20,000 on a makeover of her Victorian house and Tony Blair claiming for the interest on a £296,000 mortgage on a home bought for £30,000.

MPs on the House of Commons Commission, which oversees Parliament, will meet today to approve a new independent unit to process expenses, expected to cost £600,000 a year. Sir Stuart Bell, the Labour member of the Commission, said that the unit would at first be staffed by outsiders and then offered to tender for companies such as Capita or Cap Gemini. “It will be staffed by skilled people from outside Parliament and once the unit is established [plans] are already under way that it should be given over to the private sector,” he said.

MPs would have no right of appeal on rejected claims. Commons staff have complained that they put their careers on the line if they mount serious objections to expenses claims.

Sir Stuart said yesterday that receipts would not be released for public inspection if they were processed by a private company. “Receipts would be available under FOI in the unit [when it is part of the Commons] but when they go to an outside unit they would not.” Instead, information would be released under 26 broad categories, such as mortgage interest and council tax.

MPs on two key Commons committees, the Finance and Services Committee and the Administration Estimate Audit Committee, say that they were not informed of the fine print of the plan. Commons sources said that the privatisation of the Commons expenses department would not guarantee that it could be shielded from freedom of information requests.

Dr Wright, who believes that MPs are unable to reform the system themselves, said: “If this is another cunning ruse to exempt MPs from the scrutiny of freedom of information, it is as unbelievable as it is unacceptable.”

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