Tougher powers to punish peers are being examined after a disgraced ex-Tory defended his right to regularly claim a £300 daily attendance allowance despite spending almost no time in parliament.
Lord Hill, the leader of the upper chamber, expressed "dismay" at the behaviour of Lord Hanningfield who retained his seat despite being jailed in 2011 for falsely claiming £28,000 in taxpayer-funded expenses.
There is cross-party agreement on the need to beef up the code of conduct to allow action against "the small number of members whose behaviour falls below the standards we rightly expect", Lord Hill said.
Downing Street said Prime Minister David Cameron shares the dismay and backs the proposed crackdown on those deemed to have brought the House of Lords into disrepute.
It remains unclear whether this will include changing the attendance rules, which Lord Hanningfield did not break, to impose a minimum period that must be spent in parliament to qualify for the cash.
But the case also reignited demands for an elected second chamber in place of what the Electoral Reform Society calls "an anachronism which gives people lucrative and comfortable jobs for life".
Liberal Democrat-led plans for fundamental reform were derailed by Tory backbench MPs last year.
On 11 of the 19 days that the Daily Mirror newspaper monitored Lord Hanningfield's movements in July, he spent less than 40 minutes in the Lords after "clocking in" with an official in the chamber before returning to his home in Essex.
The shortest attendance during the month was 21 minutes and the longest more than five hours, with £5,700 claimed in attendance allowance and £471 in travel costs, the newspaper said.
In a defiant justification of the practice, Lord Hanningfield said the requirement to appear in the chamber is "only a mechanism for paying you" and that failing to speak or vote should not be a bar to receiving the expenses cash.
Most of the money went on "entertaining, meeting people, employing people," he said, claiming that he would "end up with £12,000 a year" for himself which he needs to eat and " pay my electricity bills".
Members of the House of Lords do not receive a salary.
He claimed that half the members of the House are doing the same and that he could name at least 50, adding that his failure to debate and vote that month is because he was still recovering from the "traumatic" expenses scandal.
While he "made some mistakes" in the past and repaid £70,000, Lord Hanningfield said he was the victim of a "miscarriage of justice" and wishes he appealed against the conviction.
The revelations led to talks between party leaders in the Lords, with s hadow Lords leader Baroness Royall suggesting a minimum attendance threshold of around four hours which could be monitored using peers' electronic passes.
Lord Steel, the former Liberal leader who has led efforts to secure stronger disciplinary action against peers who abuse the system, said he would not comment about the individual case, pointedly adding: "I don't even know what he looks like".
He accepted that much of any peer's work is outside of debates, pointing out that he did not get an allowance recently despite working a 12-hour day within parliament because he did not make it to the chamber itself.
The expenses allowance is "supposed to represent work in parliament" and it is wrong to claim for money if for only a brief stay, he said.
The official guide for peers on claiming the £300 daily allowance says simply that it is available to those "who certify that they have carried out appropriate parliamentary work".
"It's a rather daft system," Lord Steel told BBC Radio 4's The World At One.
"If you had a swipe-in, swipe-out system then you would know how long people spend there."
Labour MP John Mann called for a "full investigation into how (Lord Hanningfield) has been allowed to get away with it" and a "proper and transparent spring cleaning" in the Lords.
Moves to introduce a sanction of withdrawing financial support and access to facilities from members who breach the code of conduct are due to be brought forward for approval early next year.
Peers jailed for a year or more in future also face being banned, in line with the rules for MPs, after the Government indicated it would support backbench legislation introduced by Tory MP Dan Byles.
"Ultimately the reputation of this House rests in all our hands, which is why I believe noble Lords will want to support steps to strengthen the sanctions available to us," said Lord Hill.
It is important "for us to deal with the small number of members whose behaviour falls below the standards we rightly expect", saying of Lord Hanningfield's behaviour that he is "dismayed about the shadow it casts over the whole House".
But Katie Ghose, chief executive of the Electoral Reform Society, dismissed any changes to the expenses and disciplinary system as "tinkering at the edges" and called for fundamental reform.
While removing the " absurd anachronism" of convicted criminals keeping their seats is welcome, there needs to be much deeper reforms of the Lords "to drag it kicking and screaming into the 21st century", she said.
"The House of Lords is an anachronism which gives people lucrative and comfortable jobs for life. An elected House of Lords would allow the public to hold their lawmakers to account - and that's what democracy is all about."
A senior Liberal Democrat source said: "We have argued for more than 100 years that the people who make the laws of the land should be elected by the people who have to obey them. We will do so again in 2015.
"It will be for the other parties to explain where they stand on Lords reform after vested interests in both the Labour and Conservative parties conspired to block it in this parliament."