Media playback is unsupported on your device Media caption Sir Ian Kennedy: "It's about reducing pensions, cutting back on golden goodbyes, cutting back on expenses"

The body which sets MPs' salaries has defended its plan to give them an 11% pay rise, claiming this will not cost the taxpayer "a penny more" once other changes are taken into account.

The Independent Parliamentary Standards Authority (Ipsa) wants to raise salaries by £7,600 to £74,000 in 2015.

Watchdog's case for an increase MPs' pay has slipped the pay of a selection of other public sector professionals, it said

It has also fallen behind its previous multiple of average national earnings

But Ipsa said it was not convinced that the current salary was putting talented people off becoming an MP

Neither was the salary hike justifiable as compensation for less generous pensions or expenses payments

"The salary component is justified on its own terms," it said 'Why MPs deserve pay rise'

David Cameron calls it "inappropriate" while Ed Miliband requested talks between the party leaders and Ipsa.

But Ipsa said public opinion was "more nuanced" than the "outrage" suggested.

The proposed package, to take effect in 2015, will include a "one-off" pay rise after which MPs' pay would be linked to average earnings.

Ipsa has also outlined plans to reform MPs' pensions, scrapping the "outdated resettlement payments worth tens of thousands", as well as "tightening up" expenses rules.

The package also calls on MPs to produce an "annual account of their work to help their constituents understand what it is MPs actually do".

Ipsa chairman Sir Ian Kennedy said: "We are sweeping away the out-of-date and overly generous benefits, and introducing a one-off uplift in pay.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.

"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."

Time for a Christmas quiz... Question 1 - Should MPs set their own pay?

Andrew McDonald, Ipsa's chief executive, said a two-year consultation had found the public was "split down the middle" on its plan - which it said would not cost "a penny more" than current arrangements.

"This shows us something important: this is an issue where the public has a more nuanced, and split, opinion than the reactive howls of 'outrage' from some commentators and politicians," he said.

He said the message that costs would not increase had been lost in the "hubbub of the last few days".

Once it is heard, he said, he hoped commentators would "pause before making sweeping assumptions about what the public think without asking them".

'Totally out of touch'

In an interview with BBC Radio West Midlands, Prime Minister David Cameron said: "We need a process and an outcome in which the public can be confident and a one-off large pay increase at a time when you've got pay restraint across the public sector. I think that is not on."

There will be a final review of the proposals after the next general election, which is due in 2015.

If they are approved at this stage, the pay increase will be backdated to the date of the election.

Ipsa does not need Parliament's agreement to make the changes.

Media playback is unsupported on your device Media caption Pay MPs well, says former Conservative MP Michael Brown, but the Taxpayers' Alliance's Robert Oxley says a big pay rise is "very unfair"

Mr Cameron said: "There is time to get it right. The decisions will be made in second half of 2015 and I hope [Ipsa] will think again.

"I don't want to go back, if we can possibly avoid it, to a situation where MPs vote on their own pay."

But he added: "I don't rule out, nobody rules out, taking action if they don't modify the proposal."

Labour leader Mr Miliband opposed the rise and said the three main parties must "get together to deal with this".

He said: "I want to be clear with the public, I don't think it's right that MPs should get this pay rise at a time when nurses, teachers, people in the private sector are going through a pay squeeze and facing incredibly difficult economic circumstances.

"I think it will just undermine trust in politics further. I'm determined that this pay rise does not go ahead if there's a Labour government."

Ipsa was "wrong" to propose the pay rise, he added.

Deputy Prime Minister and Liberal Democrat leader Nick Clegg said: "It would be incomprehensible to millions of taxpayers who pay the salary of MPs - and certainly incomprehensible to millions of people in the public sector whose pay has either been frozen or limited to an increase of 1% - that at this time MPs should receive such a dramatic increase in their pay."

But he added that he did not "want to go back to the bad old days when MPs set their pay and rations, so Ipsa has got its job to do as an independent body".