Alistair Carmichael made the suggestion after it emerged former attorney general Sir Geoffrey Cox had earned almost £6 million on top of his MP's salary.
Now the respected Lib Dem politician, who has served as a Scottish MP for two decades, is demanding changes to the registers' system to make standards more transparent.
Mr Carmichael said: “It is time for a complete revolution in financial transparency for politicians. My only fear is that those at the top of this government have the most to lose from tightening the rules.
“Former attorney general Geoffrey Cox was caught on film hitting out at open registers of interests, complaining about ‘frivolous complaints’ while he engaged in paid advocacy for foreign governments.
“Whether or not his actions were within the existing rules, he is walking proof that we need to recommit to the spirit of transparency and financial probity, not just the letter of the law.
“The foundations for reform are already there in the form of the reports from the Committee on Standards in Public Life. What is needed is the political will to turn those recommendations into actionable changes.”
The Orkney and Shetland MP suggested all parties should work together to come up with a solution, along with non-partisan figures like the chair of the Committee on Standards in Public Life.
He explained: “We need to be far more rigorous on financial rules.
“It cannot be enough just to declare your work – there should be clear outlines of what you are doing, when and where.
“At the same time talks should look at an independent mechanism to cap the hours and earnings MPs can put into secondary jobs, and a rigorous and speedy system to encourage disclosures and sanction those who ignore the rules.
"If these changes may appear harsh to MPs, then they will be having the right effect.
“[Former prime minister David Cameron once said that the next big scandal in politics would be lobbying. He was right – even if he wound up snared in that scandal himself.
"He also said that sunlight was the best disinfectant. If we are going to clean up this mess, then transparency in spirit and in law must be the way forward.”
His comments came as it emerged Sir Geoffrey had agreed to an additional two weeks of work representing ministers from the British Virgin Islands this month while Parliament was sitting.
Labour has lodged a formal complaint with the Parliamentary Commissioner for Standards after a video emerged showing the Tory MP apparently taking part in one of the hearings remotely from his Commons office.
Senior Conservative MP Sir Roger Gale has also labelled it “plain wrong” for colleagues to be earning money as landlords of properties they own in London, while also taking taxpayers’ cash to pay their own rent.
It was reported 14 MPs were taking advantage of a loophole in the Parliamentary expenses scheme, which means they can let their homes to tenants, and then claim for rent paid on a London rental property to live in.
The arrangement is permitted under Independent Parliamentary Standards Authority (Ipsa) rules and many of those who claim are also critical of the system, claiming it ultimately costs taxpayers more, but that they are pushed into the arrangement as MPs are not allowed to claim mortgage interest payments as expenses.
Sir Geoffrey is one of those who claims for rental income while owning a London home.
As an MP with a constituency outside London, he is entitled to claim accommodation costs for staying in the capital.
Until 2017, he was claiming between £8,000 and £9,000 a year in “associated costs”, such as utility bills and service charges on a property he owned.
But from 2018 his claims rose to £22,000 a year after he moved into a rented property.
At the same time, his declaration in the Register of Members’ Interests showed that from November 2017 he was collecting more than £10,000 a year renting out a residential property in London.
North Thanet MP Sir Roger was asked about the arrangements on Times Radio.
He said: “The situation that you’ve described, if it is correct, is plain wrong. It’s wholly maybe within the regulations, but it’s wholly against the spirit of what is happening.
“The intention was not that you should rent one place and hire/let out another. The intention was that you have to have – and you do have to have – a second base.
"If you’re a Member of Parliament, there’s no doubt about that. You’ve got to go and sleep somewhere.
“We don’t sit late at night as we used to, that’s certainly true. But nevertheless most members of Parliament from most parts of the country can’t get home at night. So you have to have somewhere to stay.
“I rent a room at a friend’s flat for about a quarter of the allowance that I’m allowed to spend because it’s congenial. And it’s value for money, as far as I’m concerned it’s value for taxpayers’ money because it is taxpayers’ money. And we need to remember that.”
An Ipsa document in 2017 acknowledged that such arrangements could be controversial, but the report advised against any change to the rules.
Boris Johnson denied during a visit to a local pharmacy the sleaze scandal could lose the Tories their seat in Old Bexley and Sidcup.
In a reply to a question on the issue, he said: “No, because Louie French is running a great campaign on the big issues that matter to people.
“[He is] building on the legacy of James Brokenshire, ensuring that Queen Mary Hospital has ever better faculties and making sure that we have ever safer streets in Greater London.”