Contracts awarded to operators meant punctuality targets were prioritised but safety was not, the London Assembly Transport Committee said.
Chair Caroline Pidgeon said it was "an outrage" and called for a review of how contracts are awarded to operators.
Transport for London (TfL) said they would "take every action we can".
Figures from TfL show that two-thirds of the 25 people who were killed in 2015 and 2016 were pedestrians.
In the same period, nearly 12,000 people were injured on-board or in incidents with buses in the capital.
The report recommended that operator contracts should be changed so that profits were not only dependent on meeting performance targets.
It found that current contracts meant drivers faced high stress levels caused by long shifts, inadequate breaks and irregular shift patterns which added to safety issues.
Ms Pidgeon said bus drivers "exist in a pressure cooker situation, with competition for road space and a focus on making buses run on time".
"TfL needs to review the way it awards contracts to bus operators and ensure it puts safety as a priority, instead of punctuality," she added.
Leon Daniels, managing director of surface transport, welcomed the recommendations and said TfL would take "every action we can to bring about further rapid improvement in bus safety".
"Our Bus Safety Programme is one element in a completely new approach to reducing the unacceptably high number of people killed or hurt on the bus network."
Val Shawcross, deputy mayor for transport, said City Hall would "continue to work with bus operators, the Met and all relevant authorities to... make London's buses the safest they can be".
Bus operators in London should be set safety targets after 25 people were killed by or on buses in the capital in the last two years, a report has found.