A system similar to the Swiss would be better. That is parliament goes like it does now, but if a member of the public doesn't agree with a particular bill passed they can petition for a referendum on the bill. They have to get X number of signatures before a referendum is called ...
This way it ensures that referendums aren't held on each and every bill passed by government, but may lend people a voice on particular bills that they feel they should be directly voting on.