Liberal party election strategist Lynton Crosby has been awarded a knighthood in the United Kingdom.

Nicknamed the Wizard of Oz, Mr Crosby has been knighted for "political service", after running the election campaign for British Prime Minister David Cameron.

He was among 1,926 people honoured in the New Year list.

Hailing from South Australia, Mr Crosby was the federal director of the Liberals until 2002, playing a key role in John Howard's four election victories.

He also had success with campaign of London Mayor Boris Johnson.

Known for his aggressive approach to political strategy, Liberal Democrat business secretary Vince Cable once referred to Mr Crosby as "an Australia rottweiler".

Controversy over knighthoods as political rewards

British Labour's shadow home secretary Andy Burnham called Mr Crosby's knighthood "outrageous".

Mr Burnham said it was "the clearest evidence yet that the Tories think they can get away with whatever they like".

Lynton Crosby was reportedly paid £500,000 for his work with the Conservative party. ( AFP: Stefan Rousseau )

Another Labour MP, Graham Jones, said it was a sign of cronyism.

"The honours system is supposed to recognise dedicated public service, not simply be a vehicle to reward Tory cronies and donors," Mr Jones said.

"David Cameron should take care not to undermine the integrity of the system."

Earlier in the week, reports of Mr Crosby's pending knighthood outraged political opponents and others who say it demeans the honours system.

Alexandra Runswick from the reform lobby group Unlock Democracy said it undermined the political system.

"He has already been involved in lobbying for big tobacco while he was the Conservatives' election strategist and using his access to the Conservative party to lobby conservative ministers," she said.

"So for me this is something that both devalues the honour system and of course undermines trust and the political system, because it's yet again David Cameron using his powers of patronage to reward his political cronies."

There have been celebrities and pop stars in the past who have received honours and knighthoods, but Ms Runswick said that when those types of people were given them, it was normally for charity work they have done.

The Independent reported that Mr Crosby was paid £500,000 ($A1,015,500) for his brief stint working for the Conservative Party in May, 2015.

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"The issue with Lynton Crosby is he's been given a knighthood for working for the Conservative Party," Ms Runswick said.

"He was doing his job and he obviously did it very well, but he was remunerated well for that. How is that adding to public life?

"It's adding life to the Conservative Party, it's obviously benefiting them and benefiting David Cameron, but I think it's hard to argue that he is contributing to public life."

Jonathan Arnott, member of the European Parliament for the UK Independence Party (UKIP), said the use of knighthoods as a reward needed to stop.

"Lynton Crosby is one of the worst examples of this kind of excess," he said.

"Knighthoods should be given to those who deserve them."

Mr Nelson said that he did not think Mr Crosby would care much about receiving a knighthood.

"To be honest I think Lynton Crosby's hourly rate is so high now that a knighthood wouldn't make much difference to it," he said.

"I'd be amazed if he goes about calling himself Sir Lynton."