Sutcliffe told Thursday's Guardian that he had written to the FA demanding immediate action and suggested that government funding, which particularly helps to support junior and grass roots football, could be cut or withdrawn.
"Funding is one lever we've got. It would be a last resort. But there has to be, and there already is, a recognition that the status quo is not good enough," Sutcliffe told the newspaper.
"(The FA) must use this opportunity to put their house in order. If that doesn't happen the influence of the FA will diminish and football as a sport will suffer."
In the letter delivered on Wednesday to FA chairman Lord Triesman, Football League chairman Lord Mawhinney and Premier League chief executive Richard Scudamore, Sutcliffe stressed the need for the organisations to work more closely together.
It praises the Premier League and Football League for the progress made on financial transparency and developing home-grown players and raised a series of financial proposals for further discussion - including the question of how the game's income should be distributed beyond the Premier League.
It also said the government will call for a unified "fit and proper person test" across all 92 clubs.
The FA responded by saying the letter would be carefully studied. "The issues raised by the original questions and the minister's response represent important challenges to the game at all levels," said an FA spokesman.
"They merit careful thought and a proper response with football working together in partnership."
