The system of elections to the Scottish parliament has been branded "a mistake" by its former presiding officer.

Speaking on Monday night, Lord Steel argued the list system - by which 56 MSPs were elected regionally by proportional representation - had created an "unacceptable democratic deficit".

Instead, the former Liberal leader recommended the single transferable vote system used to elect members of the Stormont assembly in Northern Ireland.

"Every citizen could then have a constituency MP and a choice of three or four MSPs to look after them," he told an audience at the Edinburgh international book festival.

"They would share the same offices locally to serve the public. Yes, there are drawbacks to that system but no electoral method anywhere in the world is perfect."

Change, he argued, could come with the forthcoming reduction of the number of Scottish MPs to 56.

The present system has already caused conflict between list MSPs and those elected through the first-past-the-post method, Steel said.

The current approach had led to a "confusing and expensive" proliferation of constituency offices, complained Steel.

"I registered my objection at the time, because they have become a thinly-disguised subsidy from the taxpayer for the local party machines," he insisted.

"In my view they are a serious waste of public money - and I do not exclude my own former regional office from that stricture."

He also called for "a measure of fiscal autonomy" for Scotland.

"No self-respecting parliament should expect to exist permanently on 100 per cent handouts determined by another parliament, nor should it be responsible for massive public expenditure without any responsibility for raising revenue in a manner accountable to its electorate," he argued.

"Even the smallest local council in the land, whilst deriving the bulk of its income from central government, still has to settle its annual council tax and answer for its decision to the public it services. The parliament should do no less."

Lord Steel, who retired at the last election, also defended the rising costs of the new Scottish parliament building.

"My guess is that they were contemplating a much smaller building of a standard supermarket style, on land already cleared and owned by the government next to the new Scottish executive office on Leith waterfront," he said.

Instead, he claimed that a cost of £109 million was approved when the project was handed over to a group of senior politicians which he headed.

With the redesigning of the new building, this rose to £195 million, a figure which has since doubled "for a variety of reasons which doubtless Lord Fraser's inquiry will explore".

"It is absolutely untrue that any other cost was politically hidden until after the election," he insisted.

"And it came as a genuine shock to my successor, George Reid, that the cost had risen after only four months by another £37 million, making the total cost nearly twice parliament's intended figure of £195 million."

At one point during the fiasco, Lord Steel sought help from the banks.

"Without officials knowing, I went to see senior figures in the Bank of Scotland to ask whether they could devise a method of paying off the costs over the lifetime of several parliaments, as with a house mortgage," he disclosed.

"They applied their able minds seriously to the problem but concluded that Treasury rules prevented such a desirable course.

"I reported to my colleagues on the corporate body what I had done and they shared my disappointment."