Politicians who break political donations laws in NSW should face up to 10 years in jail and disqualification from Parliament, an expert panel is set to recommend to Premier Mike Baird.

The panel, headed by businesswoman Kerry Schott, has also indicated it will recommend an extension to the time in which prosecutions can be commenced and more regular disclosure of political donations.

Dr Kerry Schott, who is chairing the review into electoral funding in NSW. Credit:Sasha Woolley

The panel was commissioned by Mr Baird to explore the prospect of fully taxpayer-funded elections following allegations at the Independent Commission Against Corruption about Liberal Party rorting of donations laws before the 2011 state election.

The panel's full report is not due until December, but an interim report was published on Thursday, just days before the government is expected to announce how it will seek to overhaul funding laws in time for next year's state election.