The culture, media and sport committee, chaired by Labour minister Sir Gerald Kaufman, said the licence fee should remain the "principal funding mechanism" when the current charter expires in 2006.
The committee conceeded that the fee was "regressive and unfair on the disadvantaged in society" but said there was "no viable alternative".
The findings were presented in a report to media secretary Tessa Jowell as part of the BBC's charter renewal process.
Other recommendations include that the BBC should work with other broadcasters to create an alternative free satellite option similar to Freeview; that BBC Three and BBC Four should remain targeted channels; and the BBC should provide a wide range of education, information and high quality entertainment across a number of genres.
There was also a suggestion that online, interactive and multimedia should play be a more prominent part.
In terms of governance, the committee recommended that it be separated in two components with corporate on one side and regulation, to maintain its independence, on the other.
The report follows last week's announcement by BBC director general Mark Thompson that the corporation would be axing 2,900 jobs and relocating several of its departments including CBBC, CBeebies and Radio Five Live to Manchester.
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