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Liberal Democrat leader Sir Menzies Campbell has said that many of the prime minister's royal prerogative powers should be transferred to Parliament.
The powers include the ability of the premier, in the name of the monarch, to go to war, call a general election, sign international treaties and grant senior appointments and honours.
Incoming prime minister Gordon Brown has already indicated that he is willing to look at the issue and call a constitutional convention to consider it.
Brown has said war-making powers should be passed to Parliament, while further reform of the honours system and House of Lords is also expected.
In a letter to Brown on Monday, Sir Menzies said he was "heartened" by the plans for a Constitutional Reform Bill and added that it would be possible to form a cross-party consensus around it.
"There is an urgent need to re-engage people with the institutions of government which require reform in order to engender popular trust," he said.
"The emphasis should be that sovereignty should rest with the people in Parliament, replacing the current concept of sovereignty residing in the Queen in Parliament.
"A bold statement along these lines would seize the public imagination and point the way forward. Liberal Democrats would offer their wholehearted support for such an initiative."
However some of the Lib Dem plans may be less acceptable to Brown, such as giving up the right to dissolve Parliament with the Queen's permission, a new government taking office only after its programme has been approved by MPs and electoral reform for the Commons.
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