The MSPs' expenses review will report by next spring

It will examine the resources MSPs require to perform their parliamentary duties and serve their constituents.

The announcement follows prolonged controversy over issues such as taxi claims and housing allowances.

The independently-chaired panel will look at members' allowances, cash support for party leaders and aid for equipment and furniture.

Holyrood presiding officer Alex Fergusson said: "We are clear that the process must be thorough in examining all aspects of allowances.

Selling properties

"We have instructed preparatory work to begin immediately. In terms of timing, the review panel will report as soon as practicable and no later than March 2008."

Some MSPs have been criticised in the past for making money by buying and selling properties, part-funded by the taxpayer, under the Edinburgh accommodation allowance scheme.

The allowance scheme has also drawn criticism for allowing members to make claims for council tax and TV licences.

The review panel will mostly be made up of independent members but will also include the former minister and Labour MSP Tom McCabe and a representative of the Scottish Parliamentary Corporate Body - Holyrood's management team.