Former ALP president Warren Mundine, who is flagging his interest in running as a Liberal candidate for a marginal federal seat, had been in secret negotiations with the Liberal Democrats to replace David Leyonhjelm in the Senate.

Mr Mundine was in discussions earlier this week to be placed atop the Liberal Democrats ticket, with Senator Leyonhjelm contemplating a move from federal politics to the NSW Upper House.

The Liberal Party has approached former ALP president Warren Mundine to run for the NSW seat of Gilmore. Credit:Pat Scala

Senator Leyonhjelm's move is contingent on the party finding a replacement.

But the Herald understands the negotiations stalled after Mr Mundine on Wednesday made public an approach from the Liberals to run for the marginal federal seat of Gilmore.