Liberal hurt by pamphlets wants new political page

Ms Kelly, whose departure from politics in 2007 was marred by the scandal over her husband's anti-Labor, anti-Islamic letter drop, has nominated herself for Penrith council.

She plans to run in the east ward, covering the same north St Marys area where her husband, Gary Clark, was caught distributing dodgy pamphlets thanking the ALP, on behalf of an Islamic group that did not exist, for supporting terrorists. Mr Clark, an orthodontist, was later convicted and fined $1000.

The scandal hurt the hopes of the then prime minister, John Howard, of mounting one of his trademark late comebacks and Ms Kelly's seat of Lindsay fell to Labor on her retirement in the "Ruddslide" of '07.

Ms Kelly, a one-time minister for sport and tourism and parliamentary secretary to the prime minister, retains a large profile. But her plan has split the Liberal Party, The Sun-Herald has learnt.

Ms Kelly is being backed by the Mulgoa MP, Tanya Davies, and her husband, Mark, members of the hard right faction. Ms Davies has to step down from Penrith council in September to comply with Barry O'Farrell's legislation, dubbed "Clover's law", preventing MPs wearing two hats.

Sections of the party question why Ms Kelly, who enjoys a lifetime parliamentary pension, would want to enter local politics.

"There are plenty of people in the party who think this will be a disaster," a Liberal source said. "No one has forgotten the pamphlet episode and this will give Labor something to latch onto during the campaign."

Another Liberal source said that the party was "working through issues" as to whether her nomination would proceed.

There were reports earlier this year that Tony Abbott had urged Ms Kelly to run in Lindsay against sitting Labor MP David Bradbury. Some in the party say it was Ms Kelly and her supporters pushing that line rather than the Opposition Leader.

Ms Kelly could not be contacted for comment.