Sources said Walia was initially reluctant to contest from New Delhi but agreed later following the party's direction.
Kejriwal had defeated Dikshit by a huge margin of over 25,000 votes in the New Delhi seat. BJP is yet to announce its candidate for the seat.
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Walia was Minister for Health and Education in Dikshit's Cabinet.
She was defeated by AAP's Somnath Bharti in Malviya Nagar constituency in the 2013 Assembly polls. She had won the seat in 1999, 2003 and 2008.