MPs should be paid £74,000 – an increase of 9.26%, according to an official recommendation which has put the chair of parliament's independent pay body on a collision course with all three of the main parties' leaders.

The Independent Parliamentary Standards Authority (Ipsa) also recommended that pay should from then on be linked to average earnings, and that a new pension on a par with those in other parts of the public service should also be introduced.

The new package – released on Thursday morning – has put the body's chairman, Professor Sir Ian Kennedy, at loggerheads with David Cameron, who has hinted that it could be scrapped if it proceeds with its plans. Responding to the announcement, the prime minister's official spokesman said Cameron believes "Ipsa needs to think again".

However, Ed Miliband, the Labour leader, argued this reaction does not go far enough to resolve the uncertainty and has written to Cameron demanding an immediate meeting with him, Nick Clegg and Kennedy.

In its final proposals, Ipsa recommended a one-off increase in salary to £74,000 in 2015 to address "the historic shortfall" in MPs' pay. "Thereafter, MPs' pay will be linked to average earnings – if they go up, so will MPs'," the authority said in a statement.

MPs should also receive a new pension similar to those in other parts of the public service, the body said. "Following public consultation on our proposals from earlier this year, we have decided to increase MPs' pension contributions further, reducing the cost to the taxpayer even further," it said.

Ipsa has also decided to scrap "resettlement payments" worth tens of thousands of pound per MP. "These will be replaced with more modest loss-of-office payments, which will be available only to those who contest their seat and lose," it said. There will also be a new regime of business costs and expenses, including ending the provision for evening meals.

Defending his reforms, Kennedy said the package would not cost the public "a penny more" and is designed to set MPs' pay on a sustainable footing for a generation.

He told Sky News: "What we're proposing today is a package of reforms – reforms long overdue. After the most authoritative study ever carried out, that's what we're going to implement."

However, he added: "I will of course listen, we'll see what they say if there is a meeting."

Kennedy said the reforms were important to stop "political deals cooked up in Westminster" on MPs' pay.

"We are sweeping away the out-of-date and overly generous benefits, and introducing a one-off uplift in pay. Crucially, thereafter MPs' pay will be linked to everyone else's," he said.

"We have designed these reforms so they do not cost the taxpayer a penny more. When taken with the tens of millions we have saved by reforming the business cost and expenses regime, we have saved the taxpayer over £35m with the changes we have introduced since 2010."

The issue of MPs' pay, a thorny issue at the best of times, has become a more highly charged political problem because nearly all public-sector workers have been asked to accept pay freezes.

While many politicians say privately that their pay has been ignored for many years and led to the expenses scandal, most also agree that the public will not support a one-off increase if austerity measures are in place.

On the eve of Ipsa's report, Cameron said the prospect of a large pay rise for MPs was "simply unacceptable" at a time when public-sector workers had seen their pay increase by less than 1% a year during the course of this parliament.

He demanded that Ipsa thought again about its proposals to increase the basic MP salary, and he made clear that he had not ruled out altering the system if that did not happen.

"First, the idea of an 11% pay rise in one year at a time of pay restraint is simply unacceptable," he told the Commons on Wednesday.

"Secondly, Ipsa do need to think again, and unless they do so, I don't think anyone will want to rule anything out. No one wants to go back to MPs voting on their own pay but we have got to have a process and an outcome that can build public confidence. Third, in my view, I think this should all be accompanied with a cut in the cost of politics."

On Thursday morning, Clegg also described the prospect of a rise as "incomprehensible".

While many backbenchers are privately keen to accept a rise, some MPs are considering donating their rises to charity if a pay rise is forced on them. That, however, would require a degree of independent checking and transparency.

In a survey of all MPs by the Daily Telegraph, 45 politicians replied to say they would reject a pay rise, while just one, Charles Walker, MP for Broxbourne, said he would accept it.

In a blogpost, Andrew McDonald, chief executive of Ipsa, called for people to look at research on MP remuneration instead of "shouting".

He said the proposals would involve pension and expenses arrangements, not just pay, and claimed the public had a "more nuanced and split opinion" than many politicians suspected.

Previously Downing Street had said the issue of MPs' pay "did not arise" until 2015 when there would be a review of Ipsa's decision, suggesting Cameron could be hoping that the dispute dies down until after the next election.

However, Miliband warned the prime minister not to kick it into the long grass. In his letter to Cameron, he said: "The public expect us to resolve this now and not wait until 2015. It only undermines confidence and trust in our political system if the uncertainty about MPs' pay is allowed to continue."

Cameron has not so far agreed to official cross-party talks, but told the Labour leader his door was "always open" on the issue.

Responding to Ipsa's recommendations, Jonathan Isaby of the TaxPayers' Alliance, said: "In recommending this pay hike at a time when wages are stagnating for millions across the country, Ipsa has demonstrated itself to be not fit for purpose.

"This unaccountable bureaucratic monster of a quango, which was supposed to help restore public faith in parliament after the 2009 MPs' expenses scandal, has in fact just succeeded in turning the clock back four years."