Alt-J will be hoping to collect their second Mercury crown after previous success in 2012.
Sheeran's latest album, "Divide", topped charts in the United States and Britain earlier this year.
Ed Sheeran, Stormzy, and The xx have been nominated for the Hyundai Mercury Prize 2017.
YouTube Red and Google Play Music to merge says Lyor Cohen
However, this change will be great when it comes to offering clear and much simpler music streaming services to consumers. As noted earlier, YouTube's music system is very complicated and with this move, it won't be changing a lot of stuff.
Indie pop band Blossoms, rapper Loyle Carner, jazz-inflected group Dinosaur and London four-piece The Big Moon are among the other nominees whose records are up for the prize.
Completing the shortlist are Glass Animals with their sophomore effort How To Be A Human Being.
This year, the panel will be made up of 12 figures in the music industry, such as artists Lianne La Havas, Jamie Cullum and Jessie Ware, broadcasters Mistajam and Clara Amfo, and a roster of critics and journalists.
"They delight in exploring musical possibilities and refusing to be pinned down by genre conventions". Last year Skepta beat out the likes of David Bowie and Radiohead to go home victorious.
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