The Independent Parliamentary Standards Authority (IPSA) also recommended cuts to perks such as meal allowances and taxis and a less generous pension scheme.
An "golden goodbyes" paid to retiring MPs could also be trimmed.
The plan has been condemned by party leaders and some MPs who say IPSA should go back to the drawing board. The watchdog is to consult on the rise but MPs cannot block it because they handed over control of the decision to the Independent body in the wake up of the 2009 expenses scandal.
"For the first time, an independent body will decide what MPs should receive. We will do so in full view, and after consultation with the public," he added.
MPs are currently paid 66,396, pounds but that is due to rise to 67,000 pounds in April 2014 and rise by further 1 per cent the following year.
Some MPs have attacked the proposals, saying IPSA should have taken greater account of the state of the wider economy and the pay freeze across the public and private sector.
