The parliamentary committee which monitors the security services should be given greater powers to obtain evidence and summon officials, the former Director of Public Prosecutions, Lord Macdonald, has urged.

The intelligence and security committee (ISC), which oversees the work of MI5, MI6 and the monitoring agency GCHQ, should be chaired by a politician from an opposition party and provided with an independent secretariat and legal advice, the Liberal Democrat peer added. The current chair is Sir Malcolm Rifkind, the Conservative former foreign secretary.

In a speech entitled "Secrecy in Justice – Can it Ever be Fair?", Macdonald said more effective parliamentary oversight of intelligence gathering was vital in the wake of revelations about mass surveillance by GCHQ and the expansion of "closed material proceedings" (CMPs) , known as "secret courts".

Macdonald warned that the Justice and Security Act, which introduced both secret hearings into civil courts and partially reformed the ISC, "has, unwittingly or not, actually weakened democratic oversight of the security and intelligence agencies".

He said it had allowed "the introduction of closed hearings into our civil justice system in national security cases, while simultaneously failing to strengthen the structures of direct parliamentary oversight in any meaningful way".

The peer warned that the way the government handled rendition cases, like that of Binyam Mohamed, and programmes like Tempora – the clandestine electronic surveillance programme revealed by leaks from the former US intelligence contractor Edward Snowden – signalled the need for enhanced public scrutiny.

"The risk they portend is simply a further weakening in democratic and parliamentary oversight – less pressure to behave," the former DPP said. "And this risk will grow unless the courts are vigilant to ensure that secrecy in justice is never be allowed to become a damaging alternative to integrity in these most sensitive areas of our public life.

He warned that the intelligence agencies have the power to "procure legislation" to dominate decision making in their sphere of influence and "even seek to lock its antagonists out of judicial processes".

Calling for more powerful oversight, Macdonald said that "in this troubling situation, and in the absence of any serious or rigorous public scrutiny of its work, the very last thing we should add to this potent brew is a still stronger dose of protective secrecy".

His speech was delivered on Wednesday at the FA Mann lecture in central London in honour of a former partner of the law firm Herbert Smith Freehills. He revealed that while he was DPP, the Americans, when returning Mohamed to Britain, "tried to make it a condition precedent that UK prosecutors would undertake to commence proceedings against him on his return to this country".

He said: "We declined to give any such indication on the grounds that we could discern no evidence against him, and that even if there were some, his torture meant that we would not use anything the Americans had claimed to obtain from him."

Macdonald said that security operations and intelligence gathering should generally escape public gaze but observed that "GCHQ's Operation Tempora is unprecedented in its scope and ambition".

He suggested reform of the ISC should reinforce its resources and increase its independence from the government. It should, he said, be established as a full joint parliamentary select committee appointed by, and responsible to, both the Lords and Commons.

"It should have specific powers to obtain evidence," he proposed. "These should include the power to obtain information, by summons, from outside parties, lay experts, ministers, and civil servants – as well as from security chiefs."

The ISC should have an independent secretariat and independent legal advice, have access to all information and its chair "should be a member of the opposition, and should not be someone who has previously had responsibility for any of the security agencies".

Macdonald's intervention follows other criticism of the ISC. Labour has called for it to become a full committee of parliament, to ensure that witnesses and whistleblowers are legally protected. Some backbench Conservatives, such as Rory Stewart, have also argued that a member of the opposition should chair the body.