After Australia opener Shane Watson was unable to have his lbw decision overturned, when replays confirmed part of the ball was predicted to hit the stumps, McGrath took to Twitter to voice his concerns.
McGrath, who boasts 563 Tests wickets, highlighted the inconsistencies of the "umpire's call" ruling which is involved in referred decisions.
Under the current rules, more than half the ball needs to be either hitting for a not out decision to be overturned, while any minor predicted nick of the stumps would render a challenge wasted.
These situations are deemed to be too close to call by technology, therefore the ruling rests with the umpire's original decision.
"DRS rule re LBW needs to be changed. Too much grey area," McGrath said.
"It should more than 50pct of the ball hitting leg stump then out less than 50pct not out.
"...they need to decide on something clear cut for DRS. Not 'it's out this time but not out next time' (when) the balls hitting both times.
"The other option for DRS is hitting any part if the stump is out, missing not out, but clear cut....no grey areas!!"
Australia has fallen foul of the DRS system regularly throughout the opening Test, with Chris Rogers and Shane Watson both failing to have their wickets saved despite replays suggesting they may have been unlucky.
They were also unable to overturn a not out lbw call against England quick Steve Finn when Hawkeye showed the stumps would most definitely have been rattled.
One of their few successes was a farcical decision to overturn an lbw call against England batsman Jonathan Trott - despite there being a clear inside edge onto the pads.
On the flipside England have become masters of using the third umpire, on Saturday challenging a Phil Hughes lbw.
Hughes was given the benefit of the doubt by the onfield umpire, who ruled that Graeme Swann's delivery had pitched outside leg before spinning into the left-handers pads.
Again, the Hawkeye's decision came back in England's favour - with part of the ball ruled to have landed in line with the leg stump.
But McGrath said this because England captain Alastair Cook was more sensible in his use of the DRS.
"If used the right way it's a good system. Alastair Cook does use it the right way," he said.