Theresa May has urged the Police Federation of England and Wales to reform, or she will enforce change.
The home secretary made the demand as she told the federation its public funding would be withdrawn from August.
A motion for reform was passed at the federation's annual conference after Mrs May's speech.
Outgoing chairman Steve Williams told the BBC the federation would "work hard" to make sure the reforms were carried out.
The organisation, which represents 126,000 rank and file officers, has faced accusations of bullying and a lack of transparency in its accounts.
Addressing the conference in Bournemouth, Mrs May said the organisation had to change "from top to bottom".
BBC home affairs correspondent Danny Shaw said Mrs May's fifth speech to the federation as home secretary was "by far the most uncompromising", leaving members shocked.
It was met with silence from the audience.
Government funding had already been reduced from £320,000 to £190,000 a year, the home secretary said, adding that the federation had built up "vast reserves" of cash.
"Show the public that you get it, that you want to take responsibility for the future of policing and you want to work with me to change policing for the better," said Mrs May.
She also announced the Home Office would use its powers to inspect the federation's accounts, and announced that she would be bringing forward proposals to make the organisation subject to the Freedom of Information Act.
And she said officers would no longer automatically become members of the federation, instead having to opt in.
The money previously spent on the federation will instead be spent on a new scheme called Police First, aimed at attracting university graduates, she added.
'Make significant progress'
The federation has been subject to allegations of widespread bullying and intimidation among its leadership, and was criticised for the way it handled the "plebgate" affair, which led to the resignation of former government chief whip Andrew Mitchell.
In her speech, Mrs May urged the federation to adopt changes recommended by the former top civil servant at the Home Office, Sir David Normington, who called for federation branches to disclose what money was held in secondary bank accounts.
She said: "Make no mistake. If you do not make significant progress towards the implementation of the Normington reforms, if the federation does not start to turn itself around, you must not be under the impression that the government will let things remain as they are.
"The federation was created by an act of Parliament and it can be reformed by an act of Parliament.
"If you do not change of your own accord, we will impose change on you."
Referring to "plebgate" and the findings of the review into the Hillsborough disaster, Mrs May said it was "not enough to mouth platitudes about a few bad apples" in the face of scandals.
Mr Williams, whose successor is set to be chosen on Friday, said of the emergency motion: "I'm extremely proud of what's taken place today. We've made history today within the Police Federation.
"And my colleagues have made the right decision in relation to embracing the reforms that are required."
He added that he was retiring as "a very proud man and a very proud policeman".
'A good beginning'
Labour MP Keith Vaz, who chairs the Commons Home Affairs Select Committee, said: "What the home secretary has done is go beyond the Normington review and indeed beyond our recommendations."
Sir David congratulated the federation for "having the courage of its convictions in order to vote through the entire package of reform that we proposed".
He said: "The organisation now has a real opportunity to recreate the professional, trusted, and unified Police Federation which its members so badly want, and once again become the trusted voice of frontline officers.
"We expect the package of reform to take at least two years to implement - but this is a good beginning.
"I hope it is the start of a process by which the Federation regains the trust of its members and becomes open and accountable whilst adopting the standards of behaviour which the public expects."
However in response to Mrs May's speech, Ian Hanson, chairman of the federation's Greater Manchester branch, said it had been a "vitriolic attack not only on the Police Federation but on every police officer in the country".
"Much has been said about professionalism and standards of behaviour in recent times. Today Mrs May went too far and should apologise," he added.