Peers could be thrown out for serious breaches of sleaze rules and MPs could be banned from earning extra cash, under the proposals.

The plans could also be made retrospective, so they would cover the four Labour peers, including Lord Taylor from Knott End, embroiled in the cash-for-influence row - if allegations against them are proved.

Ministers are examining the moves as part of efforts to restore public faith in Parliament after a series of scandals.

Justice Secretary Jack Straw is urgently preparing measures to beef up the House of Lords conduct regime, for inclusion in the forthcoming Constitution Renewal Bill.

Mr Straw's spokesman confirmed those who commit the most serious rule breaches could be expelled. Currently the heaviest punishment is being ordered to apologise.

Other disgraced Lords with criminal convictions would also faced being ejected, including author Lord Archer of Weston-Super-Mare and newspaper mogul Lord Black of Crossharbour.

Jeffrey Archer received a four-year prison sentence for perjury and perverting the course of justice, while Conrad Black has been jailed in the US for fraud.

The Sunday Telegraph claimed that Commons Leader Harriet Harman was considering a draconian ban on outside earnings for MPs.

Ms Harman has been working with Labour Chief Whip Nick Brown on "a range of options" for restricting members' employment, according to the newspaper.

Possibilities include limiting additional earnings to 15 per cent of parliamentary salary, or a partial ban that would rule out paid directorships, but leave MPs able to do other jobs - such as practising as a doctor.