More details are emerging from the leak of Sir Christopher Kelly's review into MPs' expenses.
It became clear last night that MPs will not be allowed to claim for mortgage interest payments on their second homes.
Westminster sources suggestied MPs will only be permitted to rent homes in London under the Kelly review, which is due to formally outline its findings next week.
The news only leaked after party leaders were briefed on the matter yesterday.
The review is expected to phase in the changes rather than force them through immediately. The decision could spark anger from campaigners frustrated by the failure to quickly dispense with all aspects of the discredited expenses regime.
In a drastic shift affecting nearly a third of MPs, MPs' family members will no longer be permitted to work on their staff.
The Unite union said it would oppose any attempt to prevent family members being barred from working for an MP, threatening to use unfair dismissal or discrimination law to protect its members.
The Kelly review is also expected to scrap the distinction between inner and outer London MPs. Previously those classed as living in outer London were permitted second homes in the centre of the capital.
Under the new regime, according to reports, all those within reasonable commuting distance (said to be within an hour) of London will not be able to make second homes allowance claims.
It also appears the review will order an end to so-called 'golden goodbyes' to retiring MPs.
First class travel will be radically reduced, and the £25-a-day subsistence allowance would be scrapped.
The golden goodbye comes in the form of a resettlement grant to those MPs who stand down or lose a general election contest. It is intended to assist MPs in settling into non-parliamentary life.
At the top end, it would grant MPs up to £64,000, although many end up with about half that, depending on how long they have served. The first £30,000 is tax free.
The controversial communications allowance, which opponents describe as taxpayer-funded propaganda, will also probably be scrapped.
MPs offered a mixed reaction to news of the proposals. John Mann told BBC News 24 yesterday that MPs should accept them completely, but Sir Stuart Bell doubted whether enforced redundancies of existing staff would be universally welcomed. Sir Bell employs his wife as his office manager, according to the Register of Members' Interests.
Reports of Sir Christopher's likely conclusions emerged as Conservative MP Bernard Jenkin was asked to pay back £63,250.
Expenses auditor Sir Thomas Legg wants Mr Jenkin to make the repayment after it emerged he had claimed for rent paid to a property in his constituency owned by his sister-in-law.
It is the largest repayment known to have been triggered by the 'Legg letters' which welcomed MPs back to parliament after their 82-day summer recess.
Sir Christopher's report is due to be officially published on November 4th.