Also up for the gong are Elbow, Robert Plant and Alison Krauss, and Neon Neon, the alter ego of Super Furry Animals frontman Gruff Rhys.
The Last Shadow Puppets' debut album, The Age of Understatement, is described on the band's website as containing "12 full-blooded songs, bold and brassy".

It is a collaboration between Arctic Monkey Alex Turner and Miles Kane, frontman of Wirral-based The Rascals.

They became good friends after Arctic Monkeys toured with Kane's previous group, The Little Flames, and their influences include Scott Walker, early David Bowie and David Axelrod.
Radiohead's much-acclaimed In Rainbows was first released last year as a download, for which fans could select their own price.
Adele's debut album 19, which features her powerful voice, has also been put forward for the award.

Her MySpace page lists her influences as including Etta James, Billy Bragg and Jeff Buckley.

She said on her official website: "The whole album is about being between 18 and 19; about love."

The Nationwide Mercury Prize, which is open to all genres of music, has generated more entries than ever before in 2008.
Chair of judges Simon Frith said: "It's been a strong year for UK music and we again saw a rise in the number of albums entered for the prize.
"One of the intriguing developments is the increasing blurring of different genres, with musicians clearly absorbing influences from a growing array of divergent sources - resulting in some great albums."

The shortlist of 12 albums of the year is chosen by an independent judging panel, which includes musicians, producers, presenters and music journalists.

The panel's decision is based solely on the music on the albums rather than on commercial sales success, organisers said.

The list was announced at an event in London's Covent Garden.
Albums released between July 2007 and July 2008 are eligible for this year's prize and previous winners include Klaxons, Arctic Monkeys, Antony and the Johnsons, and Dizzee Rascal.

Hip-hop sensation Estelle, whose single American Boy featuring Kanye West was a massive success, is up for Shine, her US debut album.
Elbow are also in the running with The Seldom Seen Kid and British Sea Power for Do You Like Rock Music?.

The album is the third from British Sea Power, made in the Czech Republic, Canada and Fort Tregantle in Cornwall.
Robert Plant and Alison Krauss are up for the critically-praised Raising Sand.

Also in the mix are Burial with Untrue, Laura Marling for Alas, I Cannot Swim, jazz musicians Portico Quartet with Knee Deep In The North Sea and Rachel Unthank and The Winterset for The Bairns.

This year's Nationwide Mercury Prize winner announcement will be broadcast live on BBC2 on September 9.

Here are the 12 nominated artists and albums:

Elbow - The Seldom Seen Kid
Radiohead - In Rainbows
British Sea Power - Do You Like Rock Music?
Robert Plant and Alison Krauss - Raising Sand
Burial - Untrue
Estelle - Shine
Adele - 19
Laura Marling - Alas, I Cannot Swim
Rachel Unthank and The Winterset - The Bairns
Neon Neon - Stainless Style
Portico Quartet - Knee Deep In The North Sea
Last Shadow Puppets - The Age Of Understatement