She is in the running for her acclaimed album Let England Shake which has been installed as the 11/8 favourite.
Harvey, who won in 2001 for Stories From The City, Stories From The Sea, said her latest album was influenced by current and past conflicts including the Gallipoli campaign of the First World War.
Head of judges Simon Frith described her as "an outstanding artist".
Next favourite is another female singer-songwriter - Anna Calvi - popular with critics and bookmakers alike.
The London-based singer has been championed by producer Brian Eno and praised for her dark, passionate on-stage style.
Record-breaking star Adele has also bagged a nomination to go with the clutch of awards she has picked up this year.
Her second album, 21, is already the biggest-selling album of the year and set a new record for an unbroken 11-week stint at the top of the charts.
It is the second time Adele has been up for the prize, with her debut 19 missing out in 2008 to Elbow's The Seldom Seen Kid.
The overall winner of the 2011 prize will be revealed at a ceremony at the Grosvenor House Hotel in central London and be broadcast live on BBC Two.