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The government should take into account the risks involved in implementing police and crime commissioners nationwide as forces face extra pressure policing the Olympics, MPs have warned.
The home affairs select committee expressed concern about the dramatic cuts facing police forces which could see at least 20,000 officers losing their jobs over the next four years.
With budgets set to be cut 20 per cent by 2014-15, the report said disagreement over which officers are judged to be front-line will make it harder to measure the scale of cuts.
The cross-party group of MPs warned that the deepest cuts will come in 2012 when Britain hosts the Olympic Games and once police authorities are replaced with elected police commissioners.
It called on the government to acknowledge the "risks involved in this transition".
The committee also criticised the Home Office for telling forces to protect the front line, without providing a clear definition about what constitutes the front line.
It said: "The Home Office should work with the police service to produce an agreed definition of front line, middle office and back office police roles as soon as possible."
In its report on police finances, the committee said budget cuts over the next four years will lead to "significantly fewer police officers, police community support officers and police staff".
"Police forces need a funding system that offers long-term predictability in order to be able to plan more effectively, especially at a time of reduced income."
It recommended that savings could be made through better procurement, the committee adding its disappointment that the National Policing Improvement Agency had not already tackled this.
Committee chair Keith Vaz recognised that police forces in England and Wales face a "challenging future".
"There is no doubt that the government is requiring significant savings from the police and whilst the link between police officer numbers and levels of crime is complex, in the police service the largest proportion of budgets by far is spent on the workforce.
"In order to make these savings, police forces will have to rethink and reduce the range of services that they provide and the way in which they provide those services."
He said the subsequent reduction in police services would lead to a "fundamental change to the nature of policing".
Policing minister Nick Herbert said: "Olympic security funding has been provided in addition to core police budgets, and police and crime commissioners' running costs will be no more than the current system and will deliver fundamental benefits.
"We believe that by controlling costs, cutting bureaucracy, making savings in force back and middle offices and improving productivity, the police service for the public can be maintained and improved even as funding is reduced."
For Labour, shadow home secretary Yvette Cooper said the government should "think again on its deeply destructive cuts" to police forces.
Cooper warned: "The government is failing in its duty to properly resource and protect our police forces. It is putting the safety of communities up and down the country at risk."
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