Under plans outlined yesterday by the former Holyrood presiding officer, Scotland would be represented by 40 senators in the new-look Westminster second chamber.
The group of Scots could also be given a role in the Scottish Parliament's legislative process, he said, assessing whether newly-passed laws were effective and working as planned.
David Steel outlined the plan during a speech at Strathclyde University.
He said: "The notion of Lords as part of our legislature is simply ridiculous in the 21st century."
Under his proposals the 830 working peers of the present House of Lords would be replaced by a 500-strong senate.
As with the present Upper House it could delay legislation by asking the Commons to reconsider but it would have no power of veto or control over finance.
European Parliament constituencies would be used as the "building blocks" of the body.
Senators would be elected by the MPs, MEPs and - if in Scotland, Wales or Northern Ireland - MSPs or assembly members in their areas.
Of the 500, 400 would be political candidates while the remaining 100 would have no party links, effectively replacing cross-bench peers.
The formula would give England more than 400 senators and Scotland a total of 40, including eight from outside the party system.
However, Lord Steel said there should be a convention whereby national sections of the upper house did not vote on matters which did not apply to their own territory "thus partially answering the unanswerable West Lothian question".
Lord Steel said the plans would avoid creating a potential rival to the House of Commons, a key flaw, he claimed, in last year's failed attempt to reform the Lords which led to a bitter between Tory and Lib Dem Coalition partners.
He added: "All three parties are now considering what to put into their next manifesto on the subject of Lords reform.
"I just hope they have learned from last year's fiasco."
Lord Steel, who has been at the heart of LibDem proposals for a looser, federal UK, welcomed modest Lords reforms which, from next year, will allow peers to retire and create a mechanism to expel anyone who falls fowl of the law. However, moves to block the system of appointment by the Prime Minister and other leaders have been consistently opposed.
In his speech, the former LibDem leader claimed he found his own title "an awkward encumbrance" and refused to use it when he was elected to Holyrood.
He was scathing about the independence debate, arguing that by polling day it "will have dragged on for three years to the stupefying boredom of most people".
He said the level of debate on both sides was disappointing, citing David Cameron's "absurd suggestion" that an independent Scotland would be at greater risk of terrorist attack and accusing Nicola Sturgeon of "pseudo-bribery" by promising reduced energy bills if Scots voted Yes.
A commission headed by Lord Steel to develop LibDem constitutional policy concluded more tax powers should be devolved to Holyrood to ensure the parliament raised the bulk of the cash it spent. However it said social security policy should remain uniform throughout the UK.
Lord Steel added: "We should be aiming in the constitutional overhaul to improve greatly Scottish domestic responsibility and control whilst retaining the best aspects of the Union."