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Had this problem on a job the other day. I used sugar soap and then it covered successfully with one coat of emulsion. It was only 1 years worth of smoking though. Zinsser Cover Stain is great and probably the best blocking primer but it's oil based and doesn't cover well so it would be a pain to cover entire walls. I use it to block water stains on ceilings which it does very well.
I would try sugar soap and a high solids emulsion Dulux Trade Super Matt or similar although nicotine can stain through any emulsion over time. I would probably line with a thin lining paper rather than paint the whole room with cover stain. You need to wash it with sugar soap whatever, you could wash it then sand it and wash it again.
Bullseye 123 would be the easiest to paint on, I usually use that as a primer on existing paint, it would probably block nicotine better than emulsion. You need to stir the pot the whole time as the solids fall to the bottom of the tin while you are painting.
Nicotine stained walls - sugar soap and emulsion or should I go for a shellac based primer?
I want it done right and not fuck up later but cost is a consideration and I'd prefer to work with water based paints if possible.
Edit - I think I've narrowed it down to Zinsser Cover Stain. Their website is a little confusing and suggests that Bullseye 123 and B-I-N would also do the job. Does anyone have experience with any of these paints?