Harpreet Kaur, who is studying in Australia, and another member of the household frantically searched the home when they realised that he had disappeared.

Australian police are hunting the killer of a three-year-old Indian toddler who was found dead after he went missing from his house here.

Victorian state police said a toddler's body found last evening by a council worker in long grass matched the description of missing boy Gurshan Singh Kaurchanna who went missing from Lalor suburb.

Gurhsan was in Australia on holiday with his family and was due to return to India later this week. The body was found around 30 km away from his residence.

Reacting to the incident, Victorian premier John Brumby said "This is an unthinkable tragedy. My heart goes out to the young boy's family in what must be such a terrible time.

Police will do everything in their power to establish who is responsible and bring them to justice."

Last night media report quoted deputy police commissioner Ken Jones as saying "Clearly, the circumstances are suspicious so we are fearing the worst."

"We are treating it as a homicide," Mr Jones said adding that police were probing number of areas and there were no suspects at this stage.

The toddler's mother Harpreet Kaur Channa rang police after he had been missing for 45 minutes, prompting a massive search involving more than 15 police units, the dog squad and air wing.

Mr Jones said the boy's body was found fully clothed in blue jeans and a grey top. But he said he could not say how he died.

Mr Jones said the boy's Punjabi-speaking parents were talking with police interpreters and were due to formally identify the body later last night.

He further said "I would ask for calm and support from media to allow investigators time and space to conclude a thorough investigation."

The deputy police commissioner said Victoria Police would use every resource at its disposal and investigate every possibility to ensure the killer was brought to justice.

"We are not ruling anything in or anything out," he said.

"If foul play has taken place we will do everything in our power to find out what has taken place and to bring people to justice," he added.

Harpreet Kaur, who is studying in Australia, and another member of the household frantically searched the home when they realised that he had disappeared.

When they couldn't find the boy, Ramen Deep Singh, the cousin of the boy's father Harjit Singh, called police.

A huge air and ground search was mounted and police called for help from the public to find the youngster.

The search was stepped up about 4pm (local time) when 50 volunteers joined 15 police units and the police airwing in the huge hunt.

"Maybe someone picked him up - whatever. I don't know," Kaur had said before the body was found.

Indian community shocked

Members of Indian community have expressed shock over the incident.

Expressing shock, Primus chief Ravi Bhatia said, "The killing of baby Gurshan is a heinous crime and a very sad matter and our thoughts are with the family.

The Indian-Australian community is doing every thing it can to provide emotional and material support to the family in this difficult period.

Commenting on the latest incident, Gautam Gupta of FISA (Federation of Indian Students of Australia) stressed on the need to look into the tragedy rather than focusing on how the incident will affect the Indo-Australian ties.

Indian consul general in Melbourne Anita Nayar was informed about the tragedy last night by the authorities.

Nayar also expressed her shock and grief over the incident.

Meanwhile, police had already done forensic examination. However, they could not give any details of the cause of the death. They are scheduled to do a toxicology test now.