Three peers should be suspended and repay expenses after wrongly claiming tens of thousands of pounds, a House of Lords committee has recommended.
Baroness Uddin should be suspended until Easter 2012 and told to repay £125,349, the committee said.
Peers will decide on Thursday whether to accept the committee's findings.
Meanwhile Baroness Uddin has been suspended from the Labour Party and Lord Paul has resigned his Labour party membership.
Lord Paul has already paid £41,982 and Lord Bhatia has paid back £27,446.
The House of Lords Privileges and Conduct Committee looked into their claims following allegations that peers had been deliberately designating little-used properties outside London as their "main homes".
It meant they could claim overnight allowances, which had been worth £174 a night, to stay near Westminster when Parliament was sitting as well as travel expenses.
The committee's report notes that all three of those investigated "had long-established London residences, in which they spent the bulk of their time, before acquiring a 'main residence' outside London, in which they spent a much smaller portion of their time".
Between 2001 and July 2005 Baroness Uddin told the Lords authorities her "main home" was a house owned by her brother and sister-in-law in Frinton-on-Sea in Essex. Between August 2005 and January 2010 she said it was a flat she owned in Maidstone, Kent.
The committee notes that a three-bedroom house in Wapping, east London, rented from a Housing Association has been her family home since 1993.
It said she had described both the Essex and Kent properties as a "bolt hole" - but said that did not alter the fact that her home, her family and social life were in London.
"We do not consider that a bolt hole as described by Lady Uddin could fall within any natural understanding of the term main residence. A bolt hole is merely a place of escape," the committee found.
It said Baroness Uddin should repay £125,349 - saying claims were "made wrongly and in bad faith" - and be suspended until the end of the current parliamentary session, around Easter 2012.
The Labour peer and donor Lord Paul "freely admitted" he never spent a night at the one-bedroom flat in Oxfordshire he designated as his "main residence" between late 2005 and end end of July 2006, the report said.
The report on his claims states: "Lord Paul explained his interpretation of the term 'main residence' by reference to his cultural background. He insisted that 'anyone coming out of India would not understand what main residence means'. He accepted that he had 'not once' looked at the guidance on the back of the claim forms."
The committee said they could not claim, on the balance of probabilities, that he acted dishonestly or in bad faith but added: "However, his actions were utterly unreasonable and demonstrated gross irresponsibility and negligence."
As he had already repaid the money it said he should be suspended for four months.
Responding to the report Lord Paul said: "I am disappointed that I seem to have been treated more harshly than others."
He said the rules were unclear but he would accept the committee's decision.
Lord Bhatia was criticised for designating a property in Reigate, Surrey, as his main home between October 2007 and January 2009.
The peer has owned a family home in Hampton, greater London, for nearly 20 years but told the committee he had rented the Reigate property as he was considering "downsizing" as he got older.
An investigation suggested he spent 30% of weekends there when Parliament was sitting and he shared the property with his brother, who was the first named tenant on the lease. He continued to spend weekdays in Hampton, the committee said.
An earlier inquiry by a Lords sub-committee suggested he had rented the flat "for the benefit of his brother" - who has lived there continuously while Lord Bhatia's visits were limited to "occasional days or weekends". Lord Bhatia claimed that the committee had "ambushed" him with "extremely hostile" questioning.
The committee found he did "not act in good faith" in the way he designated his "main home" - for the purposes of claiming an overnight allowance - nor in mileage claimed for journeys to that property, in Reigate. It said he should be suspended for eight months but noted he had already repaid the £27,446.
Peers will debate the committee's findings on Thursday and decide whether to suspend the peers. Leader of the Lords Lord Strathclyde said peers had "a duty" to consider reports into the conduct of the peers.
A Labour Party spokesman said Baroness Uddin had been suspended from the party and may face disciplinary action, while Lord Paul had resigned his party membership.
"The Labour Party expects the highest standards of its representatives and fully supports the committee's report," he said.
Lord Strathclyde said he was "shocked and dismayed" by the report and he hoped that peers would support its recommendations.
"They would be some of the toughest handed down in modern times, but in my judgment they are fully justified," he said.
"There can be no more second home scandals in the House of Lords."