Gurshan Singh Channa, who was in Australia on holiday with his parents, disappeared from the Melbourne house where he was staying on Thursday.

Victoria state police Deputy Commissioner Ken Jones said he believed the boy had been killed.

"This is now a homicide investigation, we are assuming worst-case, and at this stage we are not ruling anything in or out," Jones said.

"If foul play has taken place, we will do everything in our power to find out exactly what has happened and to bring them to justice."

The body of the child was fully clothed when found 30 km from the house where he went missing.

A postmortem examination failed to establish the cause of death.

The Indian consul general in Melbourne was told of the death by the Victoria state government because of possible ramifications in light of the spate of racist attacks on Indian nationals in Melbourne.

Jones, admitting the death would receive massive media attention in India, asked for "calm and support from the media to allow investigators time and space to conclude a thorough investigation."

Foreign Minister Stephen Smith is in India on a fence-mending exercise after the Indian government complained that the 90,000 Indian students in Australia were the target of racist attacks.

After talks with Prime Minister Manmohan Singh, Smith released a statement saying he had assured the prime minister that the government was "taking the issue of Indian student safety seriously."

The death of Gurshan Singh only came to light after Smith's meetings.

In India, Foreign Minister SM Krishna described as "most unfortunate" the death of the boy and expressed hope that the Australian police would investigate the matter thoroughly.

"Police have confirmed that there were no external injuries," Krishna told the Indian Parliament, adding toxicology examinations and other detailed forensic investigations would be conducted later on Friday.