Former Conservative council leader Lord Hanningfield, who was accused of regularly "clocking in" to the House of Lords to claim a £300 daily allowance, is facing suspension from the House of Lords until the end of the current parliament and an order to repay £3,300.
The action against the former Essex County Council leader, who was jailed in 2011 over his parliamentary expenses, was recommended by the Lords Privileges and Conduct Committee.
The committee said Lord Hanningfield should face the maximum punishment after he was found to have claimed the allowance for 11 days on which he did no parliamentary work.
Nick Clegg has called for major reform to the House of Lords in the wake of allegations of expense abuse against a peer who has already been jailed once over his claims.
"A big part of the problem is that, right now, a place in the House of Lords amounts to a job for life," the Deputy Prime Minister wrote in the Daily Mirror. "Unelected peers don't need to seek voters' consent.
"Our Parliament should be the envy of the world: a modern, transparent and democratic institution. Instead it's a relic from the 17th century."
Mr Clegg accepted that the Lib Dems had failed in their drive to secure an elected House of Lords during this Parliament.
But he added: "The British people deserve better. This latest scandal must re-energise our call for change. At the next election, my party's manifesto will once again contain a clear commitment to an elected second chamber."
A Labour MP says he has reported peer Lord Hanningfield to the police over allegations related to his parliamentary expenses.
John Mann said he was reporting the former Tory peer to the Metropolitan Police for investigation under the 1968 Theft Act.
"Lords can claim either by the half-day or the day," said Mr Mann. "If what has been reported is accurate, he has been doing much less than half-days but claiming for a day."
In a letter to Met Commissioner Sir Bernard Hogan-Howe, obtained by the Mirror, Mr Mann said it appeared that Lord Hanningfield's actions could amount to obtaining money by deception.
A Scotland Yard spokesman said the Met was not aware of Mr Mann's complaint having been received.
A peer who has defended regularly "clocking in" to claim a £300 daily allowance said he found The Daily Mirror's report on him "very offensive" and that he was a "hardworking" member of the House of Lords.
He said: "I haven't done anything wrong at all. I've made certain that I've not broken any rules, so I haven't done anything wrong at all.
"I've tried to be a hardworking peer again...and I find the Mirror very offensive, quite honestly, in following me around when I wasn't very well."
There is no suggestion he broke any rules.
The leader of the Lords said he felt "dismay" over reports that a peer who was jailed for expenses fraud had regularly "clocked in" for a brief period of time to claim a £300 daily attendance allowance.
Lord Hill of Oareford told peers: "[I feel] dismay about the behaviour and dismay about the shadow it casts over the whole House".
In a short statement, he added that steps would be taken to "deal with the small number of members whose behaviour falls below the standards we rightly expect".
Lord Hill of Oareford's comment came after Lord Hanningfield - who served nine weeks of a nine-month sentence in 2011 for falsely claiming £28,000 in parliamentary expenses - said it was normal practice and claimed as many as 50 others did the same.
There is no suggestion that the former Conservative broke any rules.
Speaking to Sky News, Lord Hanningfield said: "I didn't clock in to claim my expenses. This is all a storm in a tea cup really.
"The checking-in is a mechanism for the Lords to get paid. Most of our work is not actually in the chamber of the House of Commons - it's the post we get, the e-mails we get, all the letters we get.
"Then we take on particular interests and my interests are transport and education so we follow those up.
"We don't do that in the chamber. But going in the chamber is a mechanism to pay us so that is why we have to go in to the chamber."
Labour MP John Mann is expected to formally request an investigation into Lord Hanningfield after it emerged that he allegedly "clocked in" to claim a £300 daily attendance allowance despite spending less than 40 minutes inside the House of Lords on 11 occassions in July.
There is no suggestion that the former Conservative broke any rules, but he faced calls from the Labour MP for him to be investigated by parliamentary authorities over the practice.
Mr Mann said: "There needs to be a full investigation into how he has been allowed to get away with it. We need to give the House of Lords a proper and transparent spring-cleaning."
David Cameron's official spokesman said he had not spoken to the Prime Minister about Lord Hanningfield's alleged "clocking in" claims but told reporters: "I understand the concerns that have been raised."
The House of Lords Commissioner for Standards - who is is responsible for investigating alleged breaches of the peers' code of conduct including on the use of expenses - has not yet received any complaint about Lord Hanningfield, a spokesman said.
Members of the House of Lords who are not paid a salary may claim a daily allowance of £300 for "each qualifying day of attendance at Westminster", according to the official parliamentary website.
Allowances and expenses payable to unsalaried peers are linked to their attendance at:
- Sittings in the chamber of the House when formal business takes place
- Sittings of the Grand Committee
- Voting in a division
- Meetings of committees and sub-committees of the House (providing the Member’s attendance is recorded in the minutes)
- Meetings as a member of the Board of the Parliamentary Office of Science and Technology
- Meetings of the Ecclesiastical Committee and the Audit Committee
Kevin Maguire, associate editor of the Daily Mirror, believes that although Lord Hanningfield did not break any rules when he allegedly "clocked in" to claim a daily attendance allowance, the "rules are wrong".
He told ITV's Daybreak: "He may not be breaking any rules but if that's the case then the rules are wrong because I don't know anybody else who could just turn up, nod to an attendant who ticks your name and then you can leave with a £300 tax-free allowance."