A former NSW Labor MP who falsely signed off on parliamentary payments has won her appeal against home detention.

Karyn Paluzzano last October was sentenced to 18 months' detention, with a non-parole period of 12 months.

Ruling on her appeal in the NSW District court on Friday, NSW District Court judge Anthony Blackmore described the penalty as "excessive" and gave her a 14-month suspended sentence.

Judge Blackmore said he understood that Paluzzano's job as a teacher was important to her and that she had no desire to return to politics.

"I accept that the appellant is completely reformed," Judge Blackmore said.

"She is not a danger to the community or the students at the school."

Paluzzano, who was dressed smartly in a black jacket and had changed her hair colour to red, was hugged by friends and family inside the court.

She wept as she walked out the court and was comforted by her supporters.

The former Penrith MP pleaded guilty in June to falsely claiming parliamentary sitting-day relief payments between 2006 and 2007, as well as giving false and misleading evidence to a 2010 corruption inquiry into the payments.