The body that represents rank-and-file police officers is facing sweeping changes amid claims of in-fighting and questions over accounts including nearly £65 million held in reserves.
A damning review by charity the RSA accused some members of being more interested in playing political games than representing members' interests, particularly in the wake of the so-called Plebgate scandal.
It also found that the organisation is sharply divided into local factions, with 13 branches out of 43 refusing to provide details of profits placed in separate accounts.
The RSA said that subscription rates should be cut by 25% in 2015, subsidised by central reserves, in a bid to hand back some of the money to members.
The report said: "We heard of a growing disillusion with the lack of professionalism of some representatives, with a tendency for the workload to fall on a few while others enjoyed the fruits of elected position and with the wish of some to play political games while ignoring the interests of their members."
The report went on: "There was widespread dismay, not least from some of the Federation's supporters, at the damage being done to the Federation and the wider police service by the actions of its local representatives in the Andrew Mitchell affair."
Some members of the Federation, which represents officers from the rank of constable to inspector, went head to head with former chief whip Mr Mitchell after he was involved in a foul-mouthed confrontation with officers in Downing Street in September 2012.
The following month Inspector Ken MacKaill, Detective Sergeant Stuart Hinton and Sergeant Chris Jones were accused of giving misleading accounts of what Mr Mitchell had said about the incident at a meeting in his Sutton Coldfield constituency.
The RSA report said: "We have met leaders at all levels of the Federation who are up for the challenge and understand the urgent need for change. We have also encountered some who are more interested in fighting internal battles and protecting their own positions. If the Federation is to succeed to the future, the membership will need to demand an end to internal division and the pursuit of narrow self-interest and get behind those who are ready to lead a programme of fundamental reform."
It recommended that a new National Board should be set up with a chairman elected by all members, rank committees abolished, and subscriptions sent directly to the central Federation.
The Federation's latest published accounts show that centrally held reserves are at £29.5 million and those held by branch boards stand at around £35 million.
Of the 43 branch boards 13 did not respond at all when asked for details of profits generated by commissions earned on financial and insurance services provided in some areas for members.
The RSA said: "This was a very disappointing response and points to a significant issue with openness and transparency."
It went on: "This is a finance system that relies on effectively 43 independent businesses with a certain degree of fixed cost, hitting smaller branches harder than larger branches. Reservoirs of resource accumulate in certain areas, drought in others, transparency in some places, and a lack of transparency in others.
"This is not a recipe for a trusted, professional, united organisation offering its members good value for money and meeting their needs. From every perspective we do not think it can or should continue.
"These are very urgent matters. In our view, the Federation's reputation is at risk from its current lack of openness. This is particularly so in relation to some of its branches unpublished accounts, which create suspicion (expressed to us during our evidence gathering) that they have something to hide, even when it is all above board."
It criticised the organisation for failing to effectively fight controversial government budget cuts of 20%, accusing members of attacking opponents rather than making sensible arguments.
"The Federation has failed to make its voice sufficiently heard or to put its public case effectively. It needed to marshal the evidence at national and local levels about the effect of cuts and to build public support for its case and then match this evidence to a credible strategy of influence. It has conspicuously failed to do so."
The Federation as a whole has spent too much time arguing amongst itself about its strategy and response and trying to resist some of what was inevitable given the wider economic and public context."
It went on: "It has also too often fallen back on its traditional tendency to attack and try to undermine those who are proposing the changes, rather than take on the issues."
Political back-biting risks bringing the reputation of the Federation and the police into disrepute, the RSA said.
"The Federation should be a powerful voice for standards in British policing but at present it is badly placed to be that voice. Throughout our inquiry we have heard allegations that some Federation representatives who have personally targeted successive Home Secretaries, Andrew Mitchell, Tom Winsor and others, bringing the Federation into disrepute and risking the police reputation for impartiality and integrity.
"We have also been given evidence of bad behaviour within, including poor treatment of staff at, HQ and the targeting of representatives in social media, at conference and elsewhere simply because they hold a different view. If the Federation wants to be respected and listened to in the future, this has to stop.
"The actions of the Federation representatives in their dealings with the former Chief Whip Andrew Mitchell...highlight the extent to which some representatives feel they can pursue local action and campaigns regardless of the impact on the wider Federation and the views of their colleagues."
The RSA found that 68% of the membership feel fairly or very dissatisfied that the national leadership is adequately safeguarding their interests.
Chairman of the review panel Sir David Normington said: "We have no doubt that front line police officers need an effective voice to represent their interests. But we are equally clear from the evidence we heard that the Federation is not fulfilling that function well enough at the moment and needs major reform.
"There is an urgent need for it to regain the trust of its members, to be much more open and accountable and to adopt the kind of stands of behaviour and conduct which the public expects of police officers.
"If it is to regain its influence, it must put behind it the internal distrust and divisions which are such a feature of its present operations."
The RSA recommended that guidance on expenses should be drawn up, annual accounts made public and a national standard set for behaviour.It also said a database of members should be drawn up, as one does not currently exist.
Chairman of the Police Federation Steve Williams said: "This is an historic day for our organisation. The report makes uncomfortable reading and identifies that deep cultural change is needed. It shows that the organisation is currently failing to perform its role effectively and efficiently is ineffective and uninfluential, has lost the confidence of its members, and is in need of urgent reform.
"Its recommendations are far reaching and set out a roadmap of reform. There is no doubt that root and branch change is required. The Federation needs to embrace this challenge however difficult that may be. Its findings will be seen by some as controversial and that they undermine the fabric of our organisation. However, I have no doubt that if the Federation fails to deliver the change required, others will do it to us.
"The Police Federation plays a vital role and it is essential that we are an effective voice representing front line police officers. But we need to do that with the highest standards and the greatest of integrity. The Independent Review gives us the opportunity to build the Federation of the future. An organisation that we can be justly proud of, that has clear purpose and direction, is accountable and transparent. Only by achieving this can we once again become the trusted voice for front line officers."