Michel Platini says "the values that football represents are in danger" and told the European parliament in Brussels that UEFA are considering enforcing a cap on the expenditure of clubs.
The UEFA president has been an outspoken critic of the frivolous spending by Europe's elite clubs - much of which is based on borrowed credit or the personal spending of wealthy benefactors - and insists it is the clubs themselves who have requested the move.
"European clubs are currently telling us that our system is in danger of financially imploding in the medium term," the 53-year-old former France captain said.
"In consultation with them, but also, I should remind you, spurred on by the reports of this parliament, we are currently looking at the idea of limiting, to a certain degree, a club's expenditure on staff - salary and transfer fees combined - to an as yet undecided percentage of its direct and indirect sporting revenue."
Platini hinted discussions over a salary cap were accelerated by one club's "astronomical bids" during the January transfer window. It is believed he was referring to Manchester City, who are owned by Sheikh Mansour's Abu Dhabi United Investment Group, and their bid for AC Milan's Kaka.
City tabled a reported bid of £90million (Euros 100million) for the Brazilian, offering wages in excess of £250,000 per week but the playmaker opted to stay at the San Siro.
"During this year's festive season, one club which had suddenly become very rich made various astronomical bids in the transfer market," Platini added.
"Of course, there was a tremendous outcry in the football family, people called it outrageous and scandalous.
"Is it morally acceptable to offer such sums of money for a single player? Many people have responded by talking about limiting players' wages by introducing a European salary cap."
Platini stressed even the likes of Real Madrid and Manchester United - two of the world's leading clubs - are not immune to the global economic downturn and regulation must be put into force.
He added: "For the past 15 or 20 years, we have grown tired of hearing that there is no need to regulate, that the market regulates itself perfectly, that excesses and imbalances will disappear of their own accord, and that the growth of income in football is an endless upward spiral.
"We now know that none of this is true: that in football as in the economy in general, the market is incapable of correcting its own excesses, and it was not the UEFA president who said so, it was (United States president) Barack Obama."
Platini stressed this was "only the beginning of the discussion" and any legislation limiting spending would only come into force "on a consensual basis and with a view to strengthening this system".
And the former Juventus playmaker pleaded with the European parliament to help UEFA in its bid to make football more financially stable despite labour laws which currently promote free trade.
"Whatever happens, please do not stop us, on the basis of inappropriate legislation, from establishing financial fair play," he added.
"Do not stop us from putting in place mechanisms that foster the integrity of our competitions and more transparency in the management of our affairs.
"Do not stop us from acting morally. Especially when all the stakeholders - clubs, players and national associations - agree with my proposals for greater financial transparency and better governance."