A Commons committee renewed its calls for current players or managers to sit on the FA board today.
The powerful Culture, Media and Sport (CMS) Select Committee previously called for the sport's stars to be appointed to the sport's governing body in a bid to drive up standards.
Debating the committee's report into football governance a day after Fabio Capello quit as England manager following the FA's decision to sack Terry ahead of Euro 2012 amid the Chelsea defender's forthcoming racism trial, Tory MP Damian Collins said the FA was the English game's moral guardian.
"The events of the last seven days demonstrate that the FA has an obligation to demonstrate to be the moral guardian of the game in this country, and not simply the administrator of football," said the Folkestone and Hythe MP.
"Because football plays such a fundamental role in our society - football in Britain really is an expression of the country in which we live - it is right our Parliament takes a view on some of the issues that have come before us.
"There are issues that affect the whole of society and not simply the administration of a football club or a footballing competition."
One of the CMS committee's key recommendations was for the game's players or managers to have a say in its running.
Committee chairman and Conservative MP John Whittingdale called for "two representatives of the professional game, presumably one from the Premier League and one from the football league, and two representatives from the national game" to sit on the body.
Sports Minister Hugh Robertson demanded "a much better mix of independent expertise and the constituents' interests", adding: "Reform of the board for the outside world is emblematic of the whole process and crucially, if you look at the select committee's report, unless the board is reformed and there is a proper system of corporate governance at the FA, it becomes very, very difficult to achieve a great number of the other things that lie further down the stream."
He also warned the FA ministers would pass new laws if it failed to act voluntarily.
The MPs' report also demanded a greater role for supporters in running clubs, for clubs to limit debts and make themselves financially solvent, stricter tests on potential owners, and urged the FA to follow Germany's licensing model for football teams.
Whittingdale pressed the FA to tackle the sport's debts, which sees Premier League clubs owing a combined £3.5billion.
He said: "Debt has become an enormous problem for our game; something like half of football league clubs have gone into administration since 1992 and all operate on very narrow margins."
Speaking in Thursday's Westminster Hall debate, Whittingdale went on to praise Germany's "impressive" system saying: "We saw the way in which that was used to ensure clubs do not trade beyond their means for long periods and they were required to follow certain rules specified by the Bundesliga (Germany's league).
"It was for that reason that we thought if we are to see the changes we thought are necessary there needs to be a national licensing scheme."
Labour MP for Liverpool Walton Steve Rotheram said football's bosses had "failed to properly regulate our national obsession".
He claimed the FA's "fit and proper person" test, which examines potential club owners' characters and business interests, was "an absolute sham" with some chairmen "playing fast and loose" with clubs which were "pillars of communities across Britain".
Liberal Democrat Don Foster (Bath) called on the FA to "get a grip on the governance and finances of the crucially important part of the culture of this country".
He added: "So far it has failed."
MPs also demanded bigger input from fans in the running of their clubs, with Mr Whittingdale saying: "It's unrealistic to say top Premier League clubs are likely to be owned by their supporters, but there are some clubs lower down that are already supporter-owned and where more can be done to help supporters' trusts who want become owners."
But Conservative Mark Field (Cities of London and Westminster) said fan-ownership was "not a panacea", while shadow sports minister Clive Efford said: "If we don't empower fans and allow them to investigate things, how are we ever going to have an early-warning system?
"The fans are the early-warning system that will tell us what is going wrong at a club."
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