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Stuart Ayres' seat of Penrith wanted by former MP Jackie Kelly

Former federal Liberal MP Jackie Kelly has launched a surprise challenge to one of the O'Farrell government's rising stars, Stuart Ayres, seeking preselection in his state seat of Penrith.

As Liberal nominations closed in 25 seats for next year's state election it emerged Jess Diaz, the father of federal candidate Jaymes Diaz, will seek preselection in the seat of Riverstone.

Ms Kelly's decision to nominate has outraged supporters of Mr Ayres, who fear her association with a racist leaftlet scandal in the seat of Lindsay before the 2007 election could again damage the party brand.

Ms Kelly has said she knew nothing about the leaflet.

Ms Kelly's husband, Gary Clark, was embroiled in the scandal, which erupted on the eve of John Howard's election loss.

''This is unbelievable, considering that was her last political act,'' a Liberal source said.


A Penrith councillor, Marcus Cornish, has also nominated for Liberal preselection in the seat.

Mr Ayres, who famously won the 2010 Penrith byelection for the Liberals with a record swing and was recently brought into cabinet as Fair Trading Minister, acknowledged the party allowed any member to nominate.

''As a nominee for the seat of Penrith, I'll be running on my record,'' he said.

''I think we've achieved some fantastic results since the 2010 byelection and I'll be seeking endorsement from party members based on my strong record.''

Only months after Jaymes Diaz made national headlines over his disastrous tilt at the federal seat of Greenway, his father Jess is seeking to enter the NSW Parliament.

Mr Diaz, a Blacktown councillor, has nominated for Liberal preselection in the seat of Riverstone to challenge sitting member Kevin Conolly.

The Diaz family is believed to have control of the Liberal branches in the electorate, although the extent is disputed by some. The prospect of another Diaz candidacy is sounding alarm bells in sections of the Liberal Party.

''There will be cross-factional pressure on the Liberal executive not to allow it,'' a Liberal source predicted on Friday.

''Not only will he cause us pain in Riverstone but also in [neighbouring] Seven Hills and Londonderry.''

Mr Diaz could not be reached for a response.

Mr Conolly, who has renominated, said party rules prevented him from commenting.

During last year's federal election campaign, Jaymes Diaz gained unwanted attention after failing to name the Liberal Party's six-point plan for stopping asylum seeker boats during a television interview and then seeking to avoid further scrutiny.

Then opposition leader Tony Abbott was dogged by questions about his troubled western Sydney candidate.

Shortly after the gaffe, Jess Diaz failed in his bid to become mayor of of Blacktown.

Liberal Party nominations for preselection in 25 seats closed at midday on Friday.

Elsewhere, former NSW energy minister Chris Hartcher has renominated to contest his seat of Terrigal for the Liberals at next year's state election despite resigning from cabinet in December after his office was raided by corruption authorities.

It has also emerged that Tim James, chief of staff to new Energy Minister Anthony Roberts, will challenge Health Minister Jillian Skinner.

Mrs Skinner, the deputy leader of the NSW Liberals, has renominated for her safe Liberal seat of North Shore after widespread speculation she was preparing to retire from politics.