A powerful new watchdog should be established to monitor the conduct of NSW MPs, according to the findings of a parliamentary inquiry established following corruption investigations into former Labor ministers Eddie Obeid and Ian Macdonald.

State MPs should also be forced to abide by a strict new disclosure regime under which they would be forced to declare not only their own interests but those of spouses, partners and dependent children, the inquiry by the Privileges Committee has found.

Corruption findings against former Labor minister Eddie Obeid helped trigger the parliamentary inquiry. Credit:Dominic Lorrimer

The inquiry has also recommended inserting a new section into the politicians' code of conduct stating an MP "must not improperly use his or her influence as a member to seek to affect a decision by a public official" to benefit them, their families, associates or political party.