Peers could be expelled from the House of Lords if they are sent to prison for 12 months or absent from Parliament for long periods.
New proposals put forward by the Liberal Democrats would amend the existing rules on jailed peers, which limit any ban to the duration of an individual's custodial sentence.
Under the new rules, any peer sentenced to a year or more in prison would automatically be stripped of their place in Parliament - a rule which already applies to MPs in the House of Commons.
The move is designed to slash numbers in the upper chamber, which will soon swell to 836 members following the appointment of 30 new peers earlier this week.
Furthermore, peers who consistently refuse to attend debates in the Lords, or have left the country, would be forced to retire, while life peers who feel they are no longer able to make an effective contribution would be invited to vacate their seat voluntarily.
These measures are specifically aimed at the 51 peers who have permanently relocated outside the UK, and the hundreds of members who rarely, if ever, speak in debates.
The Lib Dems, who were thwarted in their attempts to transform the Lords into an elected chamber last year, hope the proposals will at last deliver some significant reform.
A senior party source said: "The current system is archaic, as we've seen this week.
"Any other reforms in this area must not be seen as a substitute for meaningful democratic reform of the Lords.
"But we are looking at the areas of low hanging fruit which almost everyone agrees are crying out for reform - some sort of retirement plan, dealing with those who have been convicted of criminal offences and those who never turn up or live abroad."
It is believed that the proposals have the support of Cabinet Office minister Oliver Letwin, however the views of David Cameron and other senior government figures are not yet known.