"I just urge people not to speculate on what may or may not have occurred. It's very early days into our investigation and we are treating the circumstances as suspicious," said Detective Inspector Steve Clark of the Victoria state homicide squad.

John Brumby, the premier of Victoria, said he found the boy's death "personally distressing" but urged people not to presume any motive.

"What has occurred is an unthinkable tragedy. It's deeply, deeply distressing," he told reporters.

Gurshan Singh's body was found six hours after he disappeared from his home [AFP]

Brumby said state police were using "every possible resource" and their "best investigators" to track down whoever killed Singh, and appealed for witnesses.

Police have said Singh disappeared from the family's suburban home early on Thursday afternoon.

His body was found six hours later about 30km away.

His death comes as Australia's government seeks to smooth over relations with India, a major export market, after a series of alleged race attacks including the killing of an Indian student in Melbourne in January.

On Thursday Australia's foreign minister, Stephen Smith, held talks in New Delhi with Manmohan Singh, the Indian prime minister, during which Smith assured him "that the Australian government was taking the issue of Indian student safety seriously".

"Prime Minister Singh said he appreciated the Australian government's efforts to address this issue," the foreign minister said in a statement.

Kevin Rudd, Australia's prime minister, said that he was confident that the police would get to the bottom of the matter.

"If this is a case of murder there is nothing worse, nothing worse than the brutal murder of a little child. The authorities are investigating it, we have confidence that the authorities will get to the bottom of it," he said.

Australian media have reported that Singh's family had been finding life difficult in Australia and were planning to return to India next week.