The Independent Parliamentary Standards Authority (Ipsa) is set to increase MPs pay from £66,396 to £74,000 after the 2015 general election.
At the same time as recommending a pay rise, the watchdog is also expected to announce a squeeze on pensions and the resettlement grants MPs are given when they leave Parliament.
Ipsa was created in 2009 by the Parliamentary Standards Act in the wake of the expenses scandal. It independently oversees and regulates MPs business costs and expenses
Shadow chancellor Ed Balls called the plans to increase MPs pay "out of touch" and "ridiculous" given the economic squeeze.
"I think it's preposterous we should be having this discussion and as a shadow chancellor how could I possibly say to Labour MPs, at this time with the economy like this, when people are under real pressure, when there's a cost of living crisis, that they (MPs) should take a pay rise."
Treasury chief secretary Danny Alexander told the BBC: "Most people would find it utterly incomprehensible such a large increase was being recommended.
"I think it would be wholly inappropriate for MPs to get such a large pay rise at a time when every other public sector worker sees their pay rises capped at 1%. I have said in the past that personally, I wouldn't accept it."
All three main party leaders have said they will reject any pay increase.
Two fingers to taxpayers
TaxPayers' Alliance campaign group chief executive Matthew Sinclair has said the "public simply do not back the increase" to MPs pay.
"Taxpayers will be furious that the pay rise comes at a time when MPs urge public pay restraint and the Chancellor tells us he can't afford to ease the burden of taxes on hard-pressed households and businesses," Sinclair said.
"Ipsa's own polling and research shows that the current level of pay to be broadly fair and that the public simply do not back the increase. This announcement amounts to an unaccountable quango putting up two fingers to taxpayers. The rise must be rejected."
Further changes
Ipsa is also pushing for changes to the amount that MPs have to contribute to their pensions. Final salary schemes will be downgraded to a career average in line with the rest of the public sector.
Other changes would also see a £15 dinner allowance and claims for tea and biscuits scrapped. And it would mean taxpayer-funded taxis were only permitted after 11pm.
There would also be a crackdown on claims made for running second homes, with costs such as TV licences and contents insurance no longer being met.
