The high salaries of UK executives are "corrosive" to the economy, the High Pay Commission has argued.
The commission - set up by a pressure group - says the disparity between what top executives and average workers earn has been building for 30 years.
Its study lists a 12-point plan to stop "high pay creating inequalities last seen in the Victorian era".
Vince Cable, the Business Secretary, said he would be looking seriously at the proposals.
These include forcing companies to publish a pay ratio between the highest paid executive and the company median.
The High Pay Commission was set up by pressure group Compass, with backing from the Joseph Rowntree Charitable Trust, to investigate boardroom pay.
Its year-long inquiry found that the pay of top executives at a number of FTSE companies had risen by more than 4,000% on average in the last 30 years.
Mr Cable said the vast disparities in pay were not good for society, and he would consider the proposals seriously.
He said: "It's not right that we have the situation that's been happening over the last decade where we have vast extreme awards paid on completely unrelated to the performance of companies.
"And that's not good for the consumers, it's not good for people who own the companies, it's not good for the people who work for them, and that's really got to be addressed."
However, Richard Evans, president of PepsiCo in the UK and Irish Republic, told the BBC that the UK has to be competitive with the rest of the world.
"If we want great people to come and work in the UK, given it's a global talent pool, we've got to be prepared to pay the amount of money that those executives can get elsewhere in the world," he said.
Former Barclays chief executive John Varley's salary was cited in the study.
It said he earned £4,365,636, which was 169 times more than the average worker in Britain today. It equates to an increase of 4,899.4% since 1980, when the top pay at Barclays was £87,323 and just 13 times the UK average, the report says.
But Barclays has disputed this figure, saying they could not reconcile it with actual figures for Mr Varley's pay.
The High Pay Commission also says the salary for the post of chief executive at the now partly state-owned Lloyds Bank has increased by more than 3,000% since 1980 to more than £2.5m.
It says this is 75 times the average Lloyds employee's salary, when in 1980 it was just 13.6 times the average.
A spokesperson for Lloyds Banking Group said: "The High Pay Commission's figures are flawed. They have compared the average basic salary of our employees to a remuneration package awarded to the CEO that includes salary, bonus and benefits. As a result they have reached an inflated number that is entirely unrepresentative of the truth."
Average wages in the UK today stand at £25,900 per year, up from £6,474 in 1980 - a three-fold increase, according to the commission.
The commission calls for a number of reforms, including a "radical simplification" of executive pay, putting employees on remuneration committees and publishing the top 10 executive pay packages more widely.
It says companies should be made to reveal the total pay figure earned by executives and a new national body to monitor high pay should be established.
High Pay Commission chairwoman Deborah Hargreaves said: "There's a crisis at the top of British business and it is deeply corrosive to our economy.
"When pay for senior executives is set behind closed doors, does not reflect company success and is fuelling massive inequality, it represents a deep malaise at the very top of our society.
"The British people believe in fairness and, at a time of unparalleled austerity, one tiny section of society - the top 0.1% - continues to enjoy huge annual increases in pay awards.
"Everyone, including each of the main political parties, recognises there is a need to tackle top pay."