"We very recently submitted his relatives' request for a royal pardon to the Corrections Departments," said a Bangkok Remand Centre official, who required anonymity.
If the department accepts the request, it will forward it to the Royal Household for consideration.
"The process will take months," he added.
On January 19 the Bangkok Criminal Court sentenced Nicolaides, 41, to three years in prison for insulting the monarchy in his novel Verisimilitude, which sold only seven copies.
Three years imprisonment is the minimum sentence under Thailand's harsh lese majeste law. The maximum sentence under the law, which makes it a criminal offence to insult or belittle the Thai monarchy and royal family, is 15 years imprisonment.
Nicolaides was arrested in August, last year, at Suvarnabhumi Airport as he was about to board an airplane to Melbourne.
His was one of a growing number of high-profile lese majeste cases in Thailand.
Earlier this month, prominent Thai academic Giles Ungpakorn fled to Britain after being charged in January with lese majeste for passages in his 2007 book, A Coup for the Rich, which criticised the 2006 military coup that overthrew former premier Thaksin Shinawatra.
Other prominent figures who are under investigation for lese majeste include well-know social critic Sulak Sivaraksa, former government spokesman Jakrapob Penkair and BBC Thailand-based correspondent Jonathan Head.
The dramatic rise in lese majeste cases has been linked to Thailand's chaotic politics of 2008, when the monarchy was highly politicized by anti-government protestors who claimed to be defending the institution against elected politicians.
The government has also launched a campaign to prevent lese majeste on the internet, closing down 4,000 websites in recent months.
In a speech delivered two years ago the king obliquely criticised the lese majeste law himself, noting that he should not be above criticism.