He was refused bail and is due to appear at Melbourne magistrate's court on Tuesday.

The body of three-year-old Gurshan Singh was found last Thursday about 30km from his home.

He had been visiting from Punjab in northern India along with his parents who were studying in Australia.

Strained ties

The youngster disappeared from a suburban house on Thursday afternoon while his mother was taking a shower.

His body was found by a council worker about six hours later.

Police have not released details of how they believe he may have died.

Singh's death came amid strained relations between Australia and India over a string of alleged race attacks on Indians living in Australia, including the murder of a 21-year-old Punjabi student in January.

However, police investigating Singh's death had urged people not to jump to conclusions about the case.

Last week Australia's foreign minister, Stephen Smith, held talks with Indian officials in New Delhi in a bid to bolster ties between the growing trade partners and quell fears about the safety of Indian students in Australia.

Smith admitted on Sunday that "we do have a job to repair some damage to our reputation as a result of the way in which the students issue has been perceived."