Electoral commission delivers blow to Libs

The NSW Liberal Party is set to lose millions of dollars in public funding after it was reportedly slammed by the NSW electoral commission for "concealing" the identities of illegal donors before the 2011 election.

In a finding released on Wednesday afternoon, the commission has accused the party of repeatedly failing to hand over details of donors to the Canberra-based Free Enterprise Foundation, according to Fairfax Media.

The foundation was used to "channel and disguise donations by major political donors some of whom were prohibited donors", the commission said in a statement, Fairfax reports.

The commission's findings are based on evidence given to the Independent Commission Against Corruption (ICAC) in 2014, which alleged a Liberal front company was used to "wash" illicit campaign donations for NSW parliamentary hopefuls.

The ICAC heard the foundation donated about $700,000 to the NSW Liberals before the 2011 polls.

As a result, Fairfax reports the commission will withhold $4.4 million in public funding the NSW Liberals claimed from last year's state election.

"Integrity and public confidence in the electoral system are vital," commission chairman Keith Mason QC reportedly said in the statement.