Labor has called on the Turnbull government's cabinet secretary Arthur Sinodinos to stand aside following the "extraordinary finding" of the NSW Electoral Commission on illegal donations to the NSW Liberal Party.

On Wednesday, the commission denied the party $4.4 million in public funding and accused it of "concealing" the identities of illegal major donors ahead of the 2011 state election. The donations in question totalled almost $700,000.

Senator Sinodinos was finance director and treasurer of the party at the time, and evidence given to an earlier Independent Commission Against Corruption inquiry raised concerns about his "involvement" in the matter, the commission's chairman Keith Mason said.