ANNASTACIA Palaszczuk has revealed her partner Shaun Drabsch worked on Adani's application for a loan under the Northern Australian Infrastructure Facility in his role at PwC.
She said the information came to light amid an alleged LNP campaign to smear her and her partner, as well as the government.
Mr Drabsch was a member of the PwC infrastructure team handling the application.
Ms Palaszczuk said she would veto the NAIF loan in a bid to remove any conflict and would be asking for Opposition Leader Tim Nicholls' support in doing so.
She has sought Integrity Commissioner advice on the issue.
"My partner Shaun has done everything by the book," Ms Palaszczuk said, adding that rumours being circulated by the LNP were a "new low" in Australian politics.
"My chief of staff advised me these rumours were circulating on Tuesday night," Ms Palaszczuk said.
She insisted her partner had not earlier advised her of his role in the loan.
"This afternoon I announce that my government has had no role to date in the Federal Government's NAIF loan assessment process for Adani. Now we will have no role in the future," Ms Palaszczuk said.
"To activate my decision I propose to write to the Prime Minister to notify him that my government will exercise its "veto" to not support the NAIF loan and to remove doubt about any perception of conflict.
"As we are in caretaker mode a decision like this requires the support of the Opposition Leader. I will be asking Mr Nicholls to endorse my decision."
Ms Palaszczuk said the veto was needed to remove any doubt.
Her chief-of-staff David Barbagallo flew to Cairns on Tuesday night to inform the Premier of the issues arising.
She then wrote the Integrity Commissioner who advised her of multiple options to deal with the conflict of interest.
She decided to veto the loan.
But Mr Nicholls said he would not veto the NAIF loan, accusing the Premier of failing thousands of Queenslanders whose jobs depended on the Adani mine.
"If, as the Premier claims, all necessary conflict of interest measures are correct and above board, why has she put thousands of jobs at risk with this extraordinary backflip?" Mr Nicholl said.
"Given that NAIF loans are an independent federal process and state governments have a constitutional role to pass through the loan, what's the problem?"
He said he knew nothing about the rumours circulating around LNP Senators in Canberra the Premier referred to in her statement.
"I heard about them through the media just like thousands of other Queenslanders," he said.
"I know nothing of the work of her partner. I have met him at a number of functions, he seems like a nice bloke and deserves to earn a living just like all Queenslanders."
Update your news preferences and get the latest news delivered to your inbox.