National MP Melissa Lee tonight fended off claims she breached ethical standards by not standing down when her television company received funding for an election special.

Ms Lee stood as a list candidate -- although she is now contesting the Mt Albert by-election -- and continued working for her broadcasting company, which makes Asia Downunder for TVNZ, during the election campaign.

TV3's Campbell Live tonight revealed the company received $1.2 million from New Zealand on Air in October for an election special.

"My understanding was that she didn't declare the fact that she was a National Party candidate when that decision was made," then broadcasting minister Trevor Mallard told the programme.

"It's a gross breach of ethics."

But Ms Lee said National leader John Key knew about her involvement with the company and did not have a problem with it.

"The company has received funding every year for 13 years. I don't know why it becomes an issue now," she told Campbell Live.

"When they were doing a special on politics about the election, I had specifically removed myself from the programme, I had hired an independent producer to produce the political segment of it, it was done through TVNZ and they knew about it.

"I felt that there was a conflict of interest when we were doing political stories. I removed myself."

But University of Canterbury head of journalism Jim Tully said there was a perceived conflict of interest.

"... you are seen to be in a rather awkward position, if you own a media company that has the potential to be reporting a major issue that you're involved in," he said.

"Even though you may not be at the production level, there's still a worrying connection that people will see as a conflict of interest.

"She owns the company but nevertheless people can say there will be editorial guidance, intervention, bias and I think that's the problem that arises in this, especially when you've got a government-funded outlet.