Gordon Brown today tried to draw the poison from the ongoing scandal over MPs' expenses as a remarkable ICM poll of election voting intentions pushed Labour into third place for the first time in almost 25 years.

After 10 days of lying low, the prime minister finally attempted to establish a clear way forward, by proposing a code of conduct for MPs and insisting that he would not step aside, regardless of the scale of defeat for Labour in this week's local and European elections.

Though Brown continued to insist that he would reject any cabinet attempt to persuade him to retire, one leading rebel said yesterday that the weekend's polls confirmed his belief that either "Gordon goes or the Labour party does". The rebel said he had not come across a single voice in England and Wales supporting the prime minister, though Brown continued to enjoy the support of Scottish MPs.

Brown only has a short while to inject new purpose into his party, with many MPs using the days between now and Thursday's polls to decide whether to fall in behind him or join a push to oust him.

However, asked on BBC1's Andrew Marr show today whether he would stand aside if cabinet members said it would help Labour's chances at a general election, Brown replied: "No, because I am dealing with the issues at hand. I am dealing with the economy every day."

His challenge was made more difficult yesterday by opinion polls suggesting historically bad results in this week's elections. An ICM poll for the Sunday Telegraph of voting intentions in a general election put Labour on 22 points, 18 behind the Conservatives (on 40 points), and three behind the Liberal Democrats on 25 – the first time since 1987 Labour has plunged so low in an ICM survey.

Brown hinted at an end to the current source of public outrage – the generous MP resettlement allowances – suggesting that the independent Kelly commission looking at MPs' salaries and due to report in the autumn would end their so-called "golden goodbyes".

He said: "I don't think that when the Kelly committee reports, this thing will still be like it is." Saying recent claims had offended his "Presbyterian conscience", he outlined a new system to "clean up" politics and all institutions that rely on public funds, including the NHS and the BBC. The prime minister hopes the plans may be inserted into the constitutional renewal bill due in parliament this year. It is thought likely to include a minimum service commitment to constituents, with those who break it facing a possible fine, being "named and shamed", or even ejected from their seats.

Brown said of the reforms: "[They] ­cannot be gimmicks. It's got to be serious, it has got to be ordered, and it has got to be done in a calm way. What I have seen offends my Presbyterian conscience. What I have seen is something that is appalling. I did not expect to see instance where there are clear cases which maybe have to be answered to for fraud."

The last four years' worth of receipts submitted by all MPs are being scrutinised by an independent committee of auditors. Brown has also set up a Labour party "star chamber" hearing the cases of backbenchers David Chaytor and Ian Gibson.

Last week two colleagues, also in front of the panel, removed themselves from proceedings by announcing they would stand down at the next election.

At the weekend, the health secretary, Alan Johnson, repeatedly tipped as preparing to step into the prime minister's shoes, warned Labour activists that their party would be the most badly affected by the expenses scandal when the election results come in on Friday.

The party faces the ignominy of losing all its county councils across England, with the Tories confident of taking control of Lancashire and Staffordshire while robbing Labour of overall control in the other two, Derbyshire and Nottinghamshire.

Backbenchers believe the prime minister's aides plan to outfox any backbench coup, and they expect Brown to reshuffle his cabinet on Friday and thereby hinder the mounting of any challenge. One said: "It will be difficult to get on side ministers who have within the last few hours agreed to take part in a new government."

Meanwhile, the bullishness of Tory leader David Cameron, who has sought to articulate public outrage over MPs' expenses, was pricked yesterday when a Sunday newspaper alleged he paid off a loan of £75,000 on his London home after buying another in Oxfordshire on which he could claim the second home allowance. Though he defended an arrangement whereby all of his mortgage appeared to be on the property for which he could claim allowances, he said he would accept the finding of his party's scrutiny panel.