Former New South Wales Government whip Andrew Cornwell and his wife have denied giving evidence "laced with lies" to the state's corruption watchdog.

Mr Cornwell returned to the Independent Commission Against Corruption (ICAC) witness box after previous revelations at the commission prompted his resignation as the Liberal MP for the Hunter seat of Charlestown.

When Mr Cornwell took the stand, lawyers assisting the commission accused him and his wife Samantha Brookes of lying after artist Rex Newell directly contradicted their story about how they received $10,000 for one of his paintings.

Mr Newell earlier told the hearing that Mr Cornwell's father Brien asked him if he could donate a painting to raise funds for his son's election campaign in 2010.

"He said that his son was standing [for election] and he said 'have you got a painting at home which you could give us', I thought for a raffle or an auction or something like that," Mr Newell said.

He said he dropped off a painting titled Perrin's Boat Shed, and was shocked to get a call the next day to inform him the painting had sold for $10,000 - about three times what he thought it was worth.

Mr Cornwell and Ms Brookes were subsequently asked if they wanted to change their evidence about the painting.

They declined, maintaining they had tried to give the painting as a Christmas gift to developer Hilton Grugeon and were shocked when he insisted on paying them $10,000.

They had told the hearing the painting was an unwanted gift from Mr Cornwell's father.

They said the painting had been lying around in their garage before they had loaded it into the car with other Christmas gifts for supporters, such as hampers and wine.

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Mr Grugeon has previously also contradicted the Cornwells' evidence.

He has told ICAC the painting was never intended as a Christmas gift, and he and Mr Cornwell had agreed he would pay for it as a means of showing patronage or support.

Junior counsel assisting the commission Greg O'Mahoney asked Ms Brookes: "What you just said about the Christmas gift to Mr Grugeon, that's a lie isn't it?"

Ms Brookes replied: "No, it's absolutely not a lie."

Mr O'Mahoney said: "On three occasions this year you've come before ICAC and on each occasion you've given evidence that is laced with lies."

"That is absolutely incorrect," Ms Brookes replied.

Mr Cornwell told the hearing it was Mr Grugeon who was telling lies.

He accused the developer of trying to deflect the blame.

"He was the instigator and I was the one who was foolish enough to fall for it," Mr Cornwell said.

He denied the transaction was a "sham" designed to hide the fact that a banned donor was making a contribution to his campaign.

The inquiry heard the painting, which depicted boats on a shore, bore no resemblance to the Cornwells' description of it.

The couple said it was "a farmhouse-type scene" and Ms Brookes previously told the hearing there was a jacaranda in the painting.

But Mr Newell told the inquiry: "I've never painted a jacaranda in my life."

Senior counsel assisting the commission Geoffrey Watson SC put to Mr Cornwell: "The description that you gave the commission makes it seem like you'd never seen the painting."

"It sounds like the passage of time's contaminated my memory of it," Mr Cornwell replied.