Up to 6 MPs and peers could face criminal charges following investigations by Scotland Yard into the expenses scandal.
Detectives will pass files on Labour MPs Elliot Morley, David Chaytor and Jim Devine, and peers Baroness Uddin, Lord Hanningfield and Lord Clarke of Hampstead to the Crown Prosecution Service within weeks, according to the Daily Telegraph.
The decision on whether to prosecute the politicians named in the file will be taken by Kier Starmer, the Director of Public Prosecutions, as early as January.
The parliamentarians are likely to face court on counts of fraud, for which the maximum sentence is 10 years, or false accounting, for which the maximum penalty is up to seven years.
A Metropolitan Police spokeswoman said: "We are not prepared to discuss the names and political allegiance of those under consideration."
The most serious suspected frauds are thought to be those of Morley and Chaytor who both claimed thousands of pounds for 'phantom' mortgages that had already been paid off.
Morley, a former agriculture minister, claimed £16,000 for a mortgage that did not exist and also admitted wrongly claiming £20,000 for mortgage capital repayments.
Chaytor admitted making an "unforgiveable error" when he was revealed to have claimed £13,000 in interest for a mortgage that had been paid off.
Devine, the MP Livingston, claimed £2,157 for electrical work by a company with a fake address and a bogus VAT number.
All three MPs have already been banned from standing for Labour at the next election.
Devine and Chaytor denied last night that they had been formally questioned by police. Morley said: "I have always made it clear that I am not guilty of any offence and that I am very happy to co-operate with the police, and the parliamentary authorities and procedures. I have been advised not to comment on press reports particularly when they are based more on speculation than fact."
Separately, a total of 27 MPs are believed to be under investigation by tax officials over their expenses claims.
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