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Daniel`s father Kevin Ruffels, a Myrtleford taxi driver said he was shattered by the discovery.

He said police rang him about 11.30am (AEDT) and broke the news, saying a child`s bones had been found by a dog at a house in Lawrence Street ,Myrtleford once rented by the boy`s mother.

"I`m not too good at the moment," Mr Ruffels told AAP.

"Of course it is (upsetting) but there`s nothing confirmed, but they`re pretty sure it`s a child`s body which will be Daniel`s of course."

Babysitter Mandy Martyn was caring for the toddler while Daniel`s mother attended a nursing course in Shepparton.

Daniel and his mother had been living for several weeks at the home of Ms Martyn and her three children in Standish Street.

Ms Martyn has been questioned by police over Daniel`s disappearance, but no-one has ever been charged.

Mr Ruffels said at the time of Daniel`s disappearance, police did not believe he went missing from the Lawrence Street house.

"It`s not where they thought he went missing from - they`ve got it wrong there because the Standish Street house was Mandy`s house where they thought he went missing from," Mr Ruffels said.

"I`m extremely upset and sick in the stomach to think that his body could be thrown under the house like a piece of rubbish."

"They`ve just said they found some bones - the dog apparently dug up the bones," he said.

"Mick Daly rang me from homicide to tell me that they found some bones and it`s been cordoned off and they will let me know once he`s heard anything definite, they`re going to call me straight away."

Mr Ruffels said police told him he would be the first to know the results of tests on the remains.

In July 2007, police re-launched a massive search of bushland about 15km south-west of Myrtleford after bones and a child`s T-shirt were discovered.

But Ms Thomas said the T-shirt did not belong to her son and all but two of the bones were found to be animal remains.

Police arrested Ms Martyn on July 26 last year at her Standish St home, but no charges were laid.
Ms Thomas said last year she wanted her son`s killer to rot in jail.

"It`s starting to hit home that he could be dead. I am having problems coming to terms with that, from being so positive, hopeful, that he is alive," she said at the time.

Last month, police said they would hand the case to the coroner because they did not have enough evidence to press charges.

Detective Senior Sergeant Roland Legg said the brief to the coroner would include allegations the child was tortured.

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