The prospect of a government legislating to impose an independent regulator on England’s most popular and successful sport has moved closer than ever after it was recommended by Tracey Crouch, chair of the government’s “fan-led review” into the game’s governance difficulties.

A former Conservative sports minister, Crouch made the recommendation in a letter to the culture secretary, Oliver Dowden, setting out preliminary findings after taking evidence from many supporter groups, the leagues, many clubs and others including German supporter groups. She committed to her “expert panel” doing further work before producing more recommendations on some of football’s structural challenges, most prominently the huge financial divide between the Premier League and the rest.

Setting out the need for independent regulation, Crouch recognised English football’s “many strengths”, along with its divides and failings, describing the Premier League as “one of the UK’s most successful exports”, the Championship as “the biggest ‘second division’ in Europe”, the important roles of clubs in their communities and depth of the pyramid.

Of the Football Association, which is formally the game’s governing body, Crouch praised its progress in developing St George’s Park as a foundation for England teams’ successes, building up the women’s game, said it had “worked hard to improve diversity including appointing its first female chair”, improved governance at county FAs and invested in the grassroots.

“There is much to celebrate and be proud of,” her letter says. However, describing the game’s faultlines, Crouch wrote: “The short-lived threat of the European Super League jeopardised the future of the English football pyramid. While that threat has receded – for now – the dangers facing many clubs across the country are very real with their futures precarious and dependent in most cases on the willingness and continuing ability of owners to fund significant losses.

“When this is multiplied by poor financial controls, reckless behaviour by owners and an unwillingness of the authorities to intervene the results are clear – as can be seen from the recent fates [financial collapses] of Bury and Macclesfield. Historic and much loved clubs going under. Loyal fans bereft and communities decimated.”

Interim recommendations to help solve some of these failings include giving a “golden share” club vote to a democratic supporters’ group over fundamental “heritage” issues, including ground relocation and changes to club badges, colours and competitions. Such changes are rare, however, and the proposal currently falls short of real involvement of supporters in the running of their clubs, although the letter says the panel will “explore measures to mandate greater fan engagement”.

Avoiding making firm proposals on the game’s extremely unequal sharing of its revenues, describing it as “one of the most difficult issues”, the letter also said further work would be done on the issue of Premier League parachute payments for relegated clubs, and strongly urged the Premier League and EFL themselves to “work together to seek a viable achievable solution”. The payments cushion the blow of relegation across the game’s financial chasm, but also seriously skew the finances of the Championship. The EFL chairman, Rick Parry, has described the system publicly as “an evil that must be eradicated”.

Crouch’s interim letter was, however, already firm on the need for regulation, saying: “I have stated publicly that there is a strong case for a new independent regulator, and I have heard nothing in evidence that has dissuaded me from this view.”

The Football Supporters’ Association, whose chief executive, Kevin Miles, is a member of Crouch’s panel, described the recommendation as “especially welcome” and the other proposals as “hugely encouraging”.

However there will be concerns that the remit proposed for the regulator appears limited, to detailed enforcement of financial and governance rules for individual clubs, rather than to lead a more progressive overall vision for the game.

Fair Game, a group of 20 clubs including the “phoenix” fan-owned Bury AFC and supporter-owned AFC Wimbledon of League One, sounded a cautionary note, saying that while the need for an independent regulator is “indisputable”, the letter “misses the mark when it comes to football’s financial woes”, and that the recommendations should go further.

Dowden suggested in response that the government would consider implementing the final recommendations, expected in the autumn.

“We’ve seen this year with the failed European Super League proposals and Euro 2020 how central football is to our national life,” he said. “I’ve been clear that now is the time to take a wide-ranging look at reform of the game. I will not hesitate to take bold steps where necessary.”

The Premier League, FA and EFL have always resisted independent regulation, however, and may do so again if the government does propose such a landmark intervention.