Some ‘double-jobbing’ DUP MPs will not be standing for re-election to the Assembly, the party has stated.
Several Assembly members will also give up local council positions, party leader Peter Robinson said.
The row in Great Britain over MPs' expenses and allowances has deepened, with calls for full-scale overhaul of the system.
Mr Robinson said: "People should be in no doubt as to our intentions. We are engaged in nothing less than a complete overhaul of Northern Ireland's government.
"We believe that in so doing we have the support of the overwhelming number of people who want to see good value for their money from the Assembly and expect us as a party to drive such an agenda forward."
DUP MPs who sit in the Assembly include First Minister Mr Robinson and his wife Iris, Environment Minister Sammy Wilson, David Simpson and Finance Minister Nigel Dodds.
Sinn Fein has faced criticism for its claims for its London flats used by MPs and staff while there on business. And Mr Robinson and his wife Iris have been attacked for combined bills, which include the cost of advice centres.
The DUP launched a policy document, Driving Forward a Reform Agenda, yesterday.
- Reducing the number of government departments in the Assembly.
- Cutting Assembly members.
- Streamlining the Office of the First Minister and Deputy First Minister.
- Ending the current system of political designations in the Assembly.
- Introducing voluntary coalition government in place of mandatory arrangements.
- Increased efficiency for north/south mechanisms of co-operating with the Republic of Ireland.
- Abolishing the Civic Forum of community representatives to help inform government policy.
- Scrapping the Parades Commission, which rules on contentious parades.
- Tackling public sector absenteeism.
- Merging the Equality, Human Rights and Children's Commissions.
- The party wants Assembly Member salaries frozen and responsibility for setting payments taken from them.
The document added: "Over time multiple mandates will be phased out. It is maybe unsurprising that this has taken a little longer than we would have preferred given past uncertainty around the devolved institutions.
"We are also conscious that with councils taking on significant extra powers from 2011, experienced councillors should not all exit local government at the same time."
MPs who are also MLAs receive their full Westminster salary and a third of the Stormont remuneration.
The next Assembly elections are due in two years' time. About two thirds of the 108 members are councillors. The number of councillors is to be cut as part of reforms to local government.
Mr Robinson said: "At the present time Northern Ireland is hopelessly over-governed. We want to see a reduction in the number of Assembly Members and government departments.
"Government exists to serve the people, not the other way around. The DUP has a radical reforming agenda."
He wants to reduce the number of government departments from 11 to six and cut the number of MLAs.
"It is our desire to save money and ensure that people get the best possible service for the lowest possible cost," he said.
Nationalist SDLP Assembly member and European candidate Alban Maginness criticised the DUP's plans.
"At the heart of these proposals is the same old agenda of attacking the Good Friday Agreement, attacking human rights protections and hankering after the good old days of majority rule," he said.
"These very old ideas are dressed up in the fashionable new clothes of efficiency savings. But they are threadbare, they would save nothing and do much damage."
Sinn Fein deputy first minister Martin McGuinness attacked the DUP for "shallow electioneering".
"The DUP know very well that unless they reach agreement with Sinn Fein there will be no alterations to the institutions," he added.
"Sinn Fein is committed to efficient government that is cost effective, however we will not allow the equality and representative safeguards to be diluted in any fashion.
"What we are seeing here is shallow electioneering on the part of the DUP, and I am certain that people will see through that."