THE controversial former One Nation MP Pauline Hanson has launched a surprise bid for the NSW election, nominating for a spot in the upper house.

As smh.com.au revealed last night, Ms Hanson's nomination was accepted yesterday by the NSW Electoral Commission, running as part of a group of 16 independents.

The former One Nation leader has moved to Corlette, near Nelson Bay on the NSW north coast.

She last stood for election to the NSW Parliament in 2003 without success. Ms Hanson was convicted of electoral fraud that year and sentenced to three years in jail. The conviction was later quashed.

Ms Hanson has previously been accused of contesting elections solely to secure the public funding that flows from achieving a certain percentage of the vote. In 2004, when she also stood for the Senate, she earned almost $200,000 this way. Her party, Pauline Hanson's One Nation, earned a further $56,215.

Ms Hanson could not be reached for comment last night, but the number two candidate on her ticket, Brian Burston, said the group had decided to run about a month ago.

Mr Burston, a former deputy mayor of Cessnock, said the group would run on cost of living issues. ''There's a lot of dissatisfaction among the troops about privatisation, the carbon tax and other hip pocket issues,'' he said. ''She's still got a lot of support.''

News of Ms Hanson's candidacy throws more focus on the possibility of a conservative upper house.

Labor is already running hard on the possibility that a large Coalition victory could deliver it a working majority in the Legislative Council with the support of Christian and Shooters and Fishers party MPs.

Labor says a decision by the Greens not to preference Labor has increased the likelihood of a conservative controlled upper house.

''[Hanson's] candidacy raises the prospect of a grand right-wing coalition controlling the upper house, aided and abetted by the Greens,'' a Labor source said.