UK consumers are paying £140 million a year to withdraw their own money from cash machines. Currently, 37% of ATMs in the UK charge consumers for withdrawing cash.

In its report on ATM fees, the Treasury Select committee says hard to read and ambiguous notices on fee-charging machines are "disingenuous".

"To provide information about charges at knee height or in hard to read small print is unacceptable... That such practices have been allowed to persist reflects badly on Link and on the industry."

The committee recommends that the amount of the charge should be clearly indicated on external signage and any signs that advertise the ATM. A larger minimum font size should be set for these warnings so the sign is visible from a distance.

In a statement, Link says it plans to introduce tougher rules on signage in July which will see ATM operators fined or disconnected from its network for non-compliance. Link will also launch a series of initiatives to monitor compliance with signage rules, the first of which will start next month.

But MPs also said the current system of self-regulation is " totally inadequate" and was critical of Link, which currently regulates the UK's ATM network, saying there is no "comprehensive enforcement" of its rules on transparency.

The committee warned that "an absence of effective self regulation beyond this year would not be acceptable". In light of this, the report recommends that the UK's Banking Code be extended to cover all independent ATM operators.

The report also says customers should given 30 days advance notice when a free machine is switched to a fee-paying model. Link should also publish on its Web site the number of free and charging machines in the UK, including the number of units converted from free to charging, and data on concentration of free machines.

But the committee fell short on recommending a cap on ATM fees and argues that competition between operators should ensure there is no need for a price cap.

MPs also rejected claims made by Moneybox that allowing independent operators to receive part of the Link interchange fee would enable them to reduce charges to customers. Moneybox recently halted talks with potential suitors while it awaited the outcome of the inquiry. The company has issued a statement today saying that the talks will now continue.

The UK's Nationwide Building Society, which has campaigned for the introduction of clearer labelling of fee-charging ATMs, welcomed the report. Stuart Bernau, executive director, Nationwide, says: "This report pulls no punches, and may be the last chance to protect free cash machines in the UK. Left to its own devices, it is clear that the industry will not act."