MPs will be banned from hiring relatives using public money after the next general election, according to new rules issued by the expenses watchdog.

The new rules, released on Wednesday, state that no new “connected parties” can be employed in politicians’ offices. Members of MPs’ families who are already employed will be allowed to continue to work in their offices, despite widespread criticism of the practice.

The Independent Parliamentary Standards Authority (Ipsa) said it would not force MPs to sack individuals who are currently working for them.

The rule change was released following a comprehensive consultation of MPs’ business costs and expenses. It comes amid the scandal in France over allegations that presidential candidate François Fillon paid his wife hundreds of thousands of pounds for little work.

Ipsa’s senior officials have argued that the employment of “connected parties” is out of step with modern employment practice, which requires fair and open recruitment to encourage diversity in the workplace.

Pay for MPs’ relatives costs the public purse around £4m a year, and around 150 are currently on the payroll.

Employing relatives is one of the most controversial practices still allowed under the changed expenses rules.

In 2009, the Committee on Standards in Public Life recommended a ban on the practice as it was “not consistent with modern employment practice designed to ensure fairness in recruitment, management of staff and remuneration”.

Proposals to ban family members from working for MPs following parliament’s expenses scandal were dropped by Ipsa after a backlash from politicians – with the caveat that they were restricted to putting just one family member on the payroll.

MPs who have employed family members include the defence secretary, Michael Fallon, and the Conservative MP Johnny Mercer, who employs his wife, Felicity.

Many MPs say their relatives are willing to work much longer hours than they could ask of other staff. They believe the practice helps them maintain a family life amid the long hours and pressures of Westminster.

A report by the watchdog earlier this year revealed that the pay of connected parties is on average £5,600 higher than that of other staff, and going up at twice the rate of other staff in parliament. At the time of the last general election, relatives’ average salary was £31,350 a year.

Ipsa has said controls to prevent misuse of public funds in payments to family members are “limited”. There is no central time-keeping system for MPs’ staff, and MPs are responsible for monitoring and paying overtime.

Ipsa said it was “difficult to discover whether MPs are breaking the rules” and said there was a risk MPs could break the rules or “act fraudulently without detection”.

It added: ‘The quality of our data records and the absence of controls to prevent false declarations of connected party status means that there is a high risk that any instance of an undeclared or inaccurate status will not be identified.’

Between 2010 and 2015 the cost of employing MPs’ relatives was about £21m.

