New South Wales police arrested on Thursday embattled MP Craig Thomson over 150 fraud charges the independent lawmaker is facing over his alleged mishandling of Health Services Union (HSU) funds.

A police statement said Mr Thomson was taken to the Wyong Police Station where he will be formally charged with fraud and 149 more similar charges will be laid against the former Labor Party member who represents the voting district of Dobell.

Chris McArdie, the lawyer of the MP, insisted Mr Thomson is not guilty of the fraud charges. He added the MP will file a not guilty plea to the charges.

A Fair Work Australian investigation accused the former HSU official of misusing union funds to pay the services of prostitutes, air travel and entertainment and making unauthorised cash withdrawals in excess of $100,000.

Mr Thomson was arrested at this Central Coast electoral office at about 1 p.m.

While Opposition leader Tony Abbott declined to comment on the MP's arrest, he used the opportunity to raise question about Prime Minister Julia Gillard's judgment about Mr Abbott, who used to be a Labor Party member.

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