The Political and Constitutional Reform Committee's scathing report found that the legislation had been "unnecessarily rushed" and failed to cover large parts of the lobbying industry.
Charities and other organisations have warned that the bill's tougher rules on political spending could hit their campaigning and the committee criticised the "confusing" proposals.
There is significant opposition across parties to the legislation. Leader of the House Andrew Lansley had to deny the measures were a "dog's breakfast" and hint at concessions later in the process.
The Transparency of Lobbying, non-Party Campaigning, and Trade Union Administration Bill would set a £390,000 cap on the amount any organisation - excluding political parties - could spend across the UK during elections.
A statutory register of lobbyists would also be introduced.