The Senior Salaries Review Body called on the Prime Minister to end the self-denying ordinance he imposed on Cabinet wages after the 1997 election. He is paid £112,951 a year, rather than the £158,658 to which he is entitled, while his colleagues receive £96,887 instead of £114,543 a year.

 Last night Downing Street said it had no plans to end the current arrangements, which were imposed despite protests from senior ministers as a way of setting an example of public pay restraint. 

The SSRB, a Government-appointed body, recommended that an MP's salary should go up by £2,000 this year and next, on top of the annual inflation-linked increase. This would raise a backbencher's salary to more than £54,000 in 2002. Although Mr Blair ordered the review last year, he is not expected to act on its recommendations for fear of embarrassing Labour ahead of the general election.

 The SSRB's study found that in some cases ministers earned just a fifth of what comparable counterparts in the private sector took home. The report says: "We note that the Prime Minister and Cabinet ministers do not yet draw the full salary to which they are entitled."

 "This action distorts the parliamentary pay system and creates inequity. While recognising the Government's motive of setting an example of moderation, we would hope that this distortion will be remedied as soon as possible." SSRB guidelines argue that an MP does the same sort of job as the headteacher of a large comprehensive, a police chief superintendent, or a company director responsible for a budget of up to £200 million.

 A study prepared for the SSRB by Hay Management Consultants found that the salary of a comparable public sector employee was now 13 per cent higher than that of an MP. Last month, as part as the annual review of Government salaries, the SSRB recommended a three per cent increase, which will take effect this year. An MP's salary will rise from £48,371 to £49,822 on April 1.

 The SSRB also said that the existing system of office allowances, which gave MPs considerable discretion on how the money is spent, raised "serious issues of accountability" and a "lack of transparency". It recommended scrapping the existing £51,572 Office Costs Allowance and replacing it with a much smaller Incidental Expenses Provision of up to £14,000. In exchange, responsibility for paying office staff and for installing computers would be taken on by the Commons authorities. 

From April 1 Mr Blair will take £116,339 of his £163,418 entitlement. Cabinet ministers will take £99,793 out of a possible £117,979. Lord Irvine, the Lord Chancellor and the highest paid member of the Government, will from April 1 receive a three per cent increase on his £167,760 salary and would be entitled to a further £2,000.

 For peers, the report recommends an increase in their daily allowance from £37 to £60; the overnight allowance from £84 to £120 to reflect increased hotel costs; and in their secretarial allowance from £6 to £50 a day.