She said she was stunned to be named the winner when it was announced last week.

She received a $10,000 cash prize, and her artwork will be accessioned into the National Collection - her second piece on display after her entry last year was also acquired.

Natalie, who has served in the Defence Force, will also receive a two-week research residency in the art section of the Memorial, and a mentoring day with eX de Medici, former official war artist to the Solomon Islands.

Her work titled "You are in danger and I am far away" was inspired by a phrase in a letter written by war artist Hilda Rix Nicholas.

"It is achingly beautiful," said Natalie of the letter Hilda wrote to her husband when he was at war.

"Her works were offered to the Australian War Memorial in the 1920s, but were rejected on the basis that they were too personal.

Natalie said she understood Hilda's work being in the unique position of an artist and a veteran, the wife of a navy clearance diver and sister to one as well.

"I remember Afghanistan, the tired young heads resting in hands and shaky voices calling home," she wrote in the statement accompanying her art work.

"I ignore the mental pictures of my husband disposing of bombs overseas. And I know what waits in the dark for too many of our people when they are alone. They all inspire me."

However, nothing could prepare Natalie for her own child joining the army.

"I feel an irrational sense of dread and pride," she said.

"Rage that anyone could think there was any war worth risking him in, and fury at those who would not appreciate the gift of my child; willing, if this country asks, to give his life for you and yours. It is too personal."

You can catch Natalie and her work at Dungog Contemporary in Dowling Street on October 5 and 6 during the Dungog Festival.

Natalie will set up studio in the gallery to paint some pots and talk about her current exhibition.

She will also be a guest at Sculpture on the Farm which is also part of the Dungog Festival.

Natalie's winning work was selected from a short list of 26 entries.

Memorial Director Dr Brendan Nelson said the judging panel had a difficult time deciding on a single, winning art work.

"Art is a powerful form of expression which inspires us to have the imaginative capacity to see the world through the eyes of others," he said.

"In veterans' art we gain an insight into the world of those who have served our nation.

"In many cases the subject matter tells stories that hurt, but in doing so they heal.

Deputy Director of Innovation & Business Development at the University of Canberra, Ian Drayton, said he has been researching how the creative arts can aid soldiers' recovery from combat-related post-traumatic stress disorder for some time.

"We know creative arts have a positive effect on those who have been wounded or injured as part of their service.," he said.

"The Napier Waller Art Prize is a great way for veterans to connect through art and to help current and former Defence personnel manage the pain and trauma they may experience."

A panel of art professionals from the Australian War Memorial chose a shortlist of 26 works, from which a group of judges selected 12 as Highly Commended.

The judges were: Dr Brendan Nelson AO, Director of the Australian War Memorial; eX de Medici, former official war artist; Mr Nick Mitzevich, Director of the National Gallery of Australia; Mr Gerard Vaughan AM, former director of the National Gallery of Australia; Dr Caren Florance, University of Canberra Program Director, TQVisArts, Faculty of Arts and Design, University of Canberra; General Angus Campbell, Chief of the Australian Defence Force; Mr Gary Dawson, Vice President Strategy, Thales Australia; Ms Laura Webster, Head of Art, Australian War Memorial; and Mr Paul Flynn, Chief Executive Officer, Hospital Research Foundation.