Owen Smith, the Labour leadership challenger, has proposed a five-year ban on party donors, MPs, advisers and staff receiving honours after David Cameron’s controversial “cronies list” that rewarded Downing Street allies.

The former shadow cabinet minister challenged other parties to follow his lead, saying the honours system needed to “reward selfless acts, not political and personal patronage”.

He said that if applied across politics, the rule would have blocked the vast majority of Cameron’s recent awards for donors, MPs and Downing Street aides.

Smith’s list of those who would not receive an honour under his proposal initially did not include Labour’s peerage for Shami Chakrabarti, which has been criticised because she recently conducted an inquiry into antisemitism for the party.

However, a spokesman for the Labour leadership challenger later clarified that Chakrabarti’s peerage would be covered because she was an adviser to Labour. “Shami Chakrabarti is a highly respected human rights lawyers who has been a tireless civil liberties campaigner for many years,” he said. “The timing of her appointment to the House of Lords, however, was unfortunate in light of her role as an independent adviser to the Labour party.”

Smith said his proposed five-year honours ban would stay in place until a total overhaul of the system was complete. “David Cameron’s resignation honours list has brought the system into disrepute and deepened people’s mistrust of politics. Frankly it was blatant cronyism,” he said.

“It’s simply not good enough for Theresa May to turn a blind eye to this situation – we need fundamental reform of the honours system so it can reward good deeds and restore people’s trust in politics. That is why, as Labour leader, I would introduce a five-year ban on former Labour party staffers, advisers, MPs and donors from receiving an honour or becoming a member of the House of Lords. I am calling on all the other political leaders to follow suit until the system can be overhauled.

“This would be the first step towards bringing an end to the era of political cronyism once and for all.”

However, the proposals were mocked by the SNP’s Pete Wishart, its shadow leader of the Commons, who said: “Is that it? He would ‘end cronyism’ by delaying cronyism? Labour seriously need to get on the Lords abolition agenda.”

Angus Robertson, the SNP’s Westminster leader, called on the prime minister to pull the plug on Cameron’s list, even though it has been published and approved.

In a letter to May, he said: “Theresa May is failing an early test in her leadership. When she was appointed prime minister she said she would govern for the many and not the privileged few – yet she is conceding a system which allows prime ministers to hand out honours as a form of personal patronage.”