Lord Pearson of Rannoch slammed the first-past-the-post system, which gave his party a single parliamentary seat despite winning almost four million votes.
He said: "If we want to live in a democracy we have to change the system of election to the Commons to something which more accurately reflects the will of the electorate."
He added that the situation was just as "unsatisfactory" in the Lords, with just three Ukip peers, compared to 100 Liberal Democrats.
Laws governing elections are currently spread across 25 Acts of Parliament.
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