The University of Newcastle approached Lucy Turnbull to be the next chancellor of the institution before it appointed Mark Vaile to the position.
The Newcastle Herald understands Ms Turnbull, the wife of former prime minister Malcolm Turnbull, turned down the offer.
She did not comment when approached by the Herald.
Vice Chancellor Alex Zelinsky said the university considered a number of outstanding individuals for the role of chancellor, including Mr Vaile.
"I'm really looking forward to working with him. Other people considered will remain confidential as is standard practice for any recruitment process," Professor Zelinsky said.
Mr Vaile, who served as Leader of the Nationals and Deputy Prime Minister from 2005 to 2007, was appointed to the role a week ago.
The appointment has attracted significant controversy due to Mr Vaile's links to the fossil fuel industry, in particular his chairmanship of Whitehaven Coal.
It prompted Professor Jennifer Martin, who is chair of clinical pharmacology in the university's School of Medicine and Public Health, to resign from the council in protest at both the appointment and the process by which it was made.
Professor Martin has received overwhelming support from both her colleagues and the community.
"I'm here today because I am cranky. I am cranky and I have good reason to feel this way. Many members of the community are also upset. My friends, my colleagues, everybody has been calling me about this particular issue," he said.
"The chancellor is like the chair of the company board, a very powerful position, a very influential position and regardless of whether there is any change that comes in the future you could argue that the direction may be deeply affected."
Staff and students from the faculty of health and medicine are due to meet on Monday to discuss possible protest action.
A mass meeting of students will also be held this week.
Last Friday's university council meeting was presented with a letter from the University of Newcastle Students Association which stated students were considering protests, marches and rallies if Mr Vaile's appointment was not reconsidered.
Students have also expressed concern about Mr Vaile's relationship with the higher education sector during his time in parliament.
"During Mr Vaile's time in government, billions of dollars were slashed from higher education...," the association's letter said.
Since leaving Federal Parliament in July 2008, Mr Vaile has embarked on a career in the private sector and has served on the boards of a number of ASX-listed companies and large organisations including Servcorp, StamfordLand, HostPlus, Virgin Australia, 123 Education China, Whitehaven Coal, CBD Renewable Energy, and Palisade Investment Partners.
He is due to take over as chancellor on July 1.
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