Acting on a tip-off, police searched the Currowan State Forest at Nelligen, near Batemans Bay, on Monday.

They found the human remains about 9.30am in a shallow grave near McCardys Creek Rd.

On Tuesday, Forensic Services Group personnel from Goulburn and Wollongong began exhuming the body and taking evidence.

Tests are underway to formally identify the remains, which are believed to be the decomposed body of an adult.

Police have carried out a major search of the forest and nearby roads over the past few days and say their investigations are continuing.

They were still at the scene yesterday afternoon. Police have appealed for people to stay clear of the crime area.

Locals at Nelligen's Steampacket Hotel said yesterday afternoon they were shocked to hear of the discovery, saying they had not heard of anyone going missing from the small village.

"If it was someone local we would have known," one regular said of the gruesome discovery.

"You don't think anything like that would happen in your own backyard," another added.

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

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

Just last week they renewed calls for information in the case of 15-year-old Kathleen Harris, who went missing a decade ago.

She was last seen at her home in Keppel St, Husskison, about 9am on May 31, 1999.

An Eden woman, Sylvia Pajuczok, went missing on Christmas Eve last year.

The 53-year-old was last seen near Bombala and her green Toyota Tarago was found on the Monaro Hwy.

Anyone with information about the body found near McCardys Creek Rd has been urged to contact Batemans Bay police on 4472 0099 or Crime Stoppers on 1800 333 000.