Police have discovered a body buried in a shallow grave near Nelligen, 10km north-west of Batemans Bay.

The identity of the person remains unknown as police forensic experts conduct tests to identify the body.

A search of the Currowan State Forest began on Monday after an investigation by the Far South Coast Local Area Command.

State Emergency Service personnel joined Batemans Bay Police, specialist services and a cadaver dog team in the search.

The teams discovered the grave about 9.30am on Monday near McCardys Creek Road.

The body was exhumed on Tuesday and it is understood the remains were in an advanced state of decomposition.

Forensic Services Group personnel from Goulburn and Wollongong began the exhumation and collection of evidence. It is believed the remains were those of an adult.

Police were still at the scene late yesterday, sifting the area for further clues, but they have urged the public to stay away from the area.

It is understood the body was found several hundred metres from the road and about 2km from Kings Highway.

NSW Police would not say how deep the body was buried, how long they believed it had been buried at the site or whether the remains were male or female.

Locals at Nelligen's Steampacket Hotel were shocked yesterday to hear of the discovery, saying they weren't aware of reports of people missing from the small town.

''If it was someone local we would have known,'' one regular said.

Another said, ''You don't think anything like that would happen in your own backyard.

''It's like Melbourne's Underbelly has come to town.''

Police went public with the discovery of the remains late yesterday afternoon in an attempt to elicit further information.

Anyone who knows anything about the matter is urged to contact Batemans Bay Police on 44720099 or Crime Stoppers on 1800333000.

Police hope a post-mortem being carried out at the Glebe morgue will determine what caused the death of an adult, whose decomposed body was found in a shallow grave near Nelligen last Tuesday.

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However they say it may be weeks before the results are available.

Investigators believe the remains may have been buried several years ago.

They were found last week after specialist searchers scoured bushland beside McCardys Creek Road in the Currowan State Forest.

“There was a reasonably decomposed body of an adult person found,” Batemans Bay Police Inspector Gary Megay said.

“I can’t estimate how long the body has been there, but it was found by [cadaver] dogs, which can find the remains some years after they have been left.

“The inquiry is now going to depend on the results of the post-mortem examination.”

Inspector Megay would not say if clothing was found with the remains or if they were those of a man or woman. However he said the remains were complete.

Police were “acting on information” when the search began, but Inspector Megay said this came from an ongoing investigation rather than a tip-off.

He said a search of the site had uncovered a number of exhibits and forensic evidence.

Police have been canvassing local residents and say they have not eliminated any missing persons from their inquiries.