Capping public sector wages at the same level as the Prime Minister's salary is "damaging" and could deter the "best talent", a powerful Commons committee has warned.
MPs claimed it was "crude" to peg maximum pay at £142,500 as the benefits associated with the top job in Government mean the "effective pay is actually much higher".
In a report on public appointments, they also called on the Government to end its dependency on costly head-hunting firms and develop its own recruitment expertise.
Bernard Jenkin, chairman of the Public Administration Select Committee, said: "We support pay restraint and using the Prime Minister's salary as a cap is useful to get the message across, but it is damaging to use this as an arbitrary cap.
"Taking into account associated benefits the Prime Minister receives, his effective pay is actually much higher, so benchmarking against his salary is not meaningful.
"We say that this is too crude an instrument to be useful. The Government should substitute that proposal with a proper system to assess the salaries to be paid for public appointments, to ensure we attract and retain the best, qualified, independent, effective appointees."
It follows a series of recommendations in June by Sir David Normington, the independent Commissioner for Public Appointments, to bolster regulation of recruitment for the most senior state-funded jobs. He called for a "major overhaul" of the system to ensure the best candidates "from a strong and diverse field" were selected.
MPs want Sir David to be given extra powers to check that Whitehall departments are closely monitoring how well top appointments are performing.
Mr Jenkin added: "The other facet of value for money is performance. We have also recommended that the Commissioner be given a new remit to review the departments' appraisal systems, to ensure that public appointees are performing, and if they are not, to ensure they are not just routinely reappointed.
"We need to retain, within Government, the expertise required to find and recruit from a wide pool of excellent candidates."