At their annual gathering in Bournemouth, party members expressed their disgust at the behaviour of some MPs.
The policy motion calls for MPs who have clearly and deliberately broken the rules to be subject to appropriate investigation and, where justified, criminal prosecution.
It also calls on Lib Dem internal procedures to be "beyond reproach and to ensure that MPs stay within the spirit of any new rules, as well as the letter of them".
The party's Commons chief whip Paul Burstow opened the debate by declaring British politics broken and rotten.
The policy motion, accepted by conference, says all expenses must be justified on the basis of enabling MPs to do their job.
MPs, as public servants, should behave in a transparent and fair manner and any reform of expenses should not increase, and ideally should reduce, the total cost of politics to the taxpayer.
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