Doctors and nurses have a "professional obligation" to blow the whistle on colleagues they have concerns about, MPs said.
Regulators must also send a "clear signal" to medical professionals that they are at risk of investigation if they fail to report fears they have about poor practice, the Commons Health committee added.
In a report, MPs admitted they recognised that staff who have taken action have "sometimes been subject to suspension, dismissal or other sanctions" but called for inaction to be regarded as a "serious breach".
Committee chairman Stephen Dorrell told BBC Radio 4's Today programme: "It absolutely has to be true that people working in the system have to be confident that if they deliver their professional obligations to review the care going on around them their employment clearly can't be at risk.
"The great majority of care delivered within the health care system is to a high standard but there are too many examples where standards aren't being delivered that we would all want to see. We don't do ourselves any favours if we avert our eyes from that."
The report highlights the case of Mid Staffordshire NHS Foundation Trust, where there were at least 400 more deaths than expected at the trust from 2005 to 2008. Doctors "whose practice was in itself blameless but who failed to act and raise concerns about colleagues" are now also under investigation by the General Medical Council (GMC), the committee said.
Mr Dorrell also pointed to the Bristol baby scandal, where poor care led to high death rates among heart surgery infants in the early 1990s, adding: "The real scandal of what went on there was not that nobody knew, it was that everybody knew and nobody did anything about it.
Prof Stephen Bolsin, the anaesthetist who eventually brought the scandal to light, was forced to leave the UK after being cast as a troublemaker.
Speaking from Australia he told the Today programme the original report into the death rate was rewritten by doctors and turned the blame on the anaesthetists who were raising the concerns. He said: "It became a very untenable position for me and I had to leave the UK. I applied for three other jobs in other hospitals and wasn't successful and I heard indirectly that this was because of the problems I was perceived to have caused at Bristol."
GMC chief executive Niall Dickson told the Today programme: "There is a problem and has long been a problem that when an institution itself is failing the systems are not in place to enable staff to raise concerns and to do so in an open and transparent way."