The accused Lin family murderer Robert Xie and a fellow inmate allegedly discussed multiple plans to frame other people for the killings, including a deceased people smuggler and a random Asian man named "Rob", a court has been told.

The inmate - who was a police informant – told Mr Xie's NSW Supreme Court murder trial that he and the accused used the term "candidate" to describe those who they might set up for the crime.

He said that one of the plans, devised by police in an attempt to trick Mr Xie, involved telling the accused murderer that a friend, "Harry", had access to the body of a dead people smuggler who happened to be in Sydney at the time of the murders.

"The body is going to be shipped back in a few weeks to China," the inmate, known as Witness A, told Mr Xie.

"If we're going to do it, it needs to be soon."

But the accused killer allegedly resisted this plan.

Mr Xie's preferred plot, Witness A claimed, was to find an Asian man living the area where the murders took place who had little family or community ties.

"The person who was to be fitted up for the murders had to meet certain criteria," Witness A said.

"They had to have the Christian name, 'Rob', had to be over a certain age ... I think 35 to 40 …"

"My interpretation was that it needed to be somebody who wasn't going to be missed."

He said Mr Xie had asked him to get a mobile phone once he got out of prison and to use the diary function to put in meetings between 'Rob' and one of the murder victims, Lily Lin.

This was meant to suggest that a failed affair was the motivation for the crimes.

The phone would then be planted in or underneath Rob's house.

Earlier, Witness A said that in three separate conversations, Mr Xie told him he had bought the hammer used in the murders from a hot dollar shop.

"I said 'if we're going to plant a hammer, it needs to look exactly the same'," Witness A said.

"He said it needs to be between 35 and 40mm long – flat round face, no claw and a wooden handle about one foot long.

"He instructed me to purchase the hammer or a small torch from a $2 shop, pay in cash, and ensure the item had no batch or serial number."

Under cross examination Witness A agreed that he had asked for a monetary reward in return for giving evidence against Mr Xie.

"I'm suggesting that you specifically indicated that you would stay [in the prison with Mr Xie] on the proviso that police applied for a monetary reward immediately upon the completion of the police investigation," counsel for Mr Xie, Graham Turnbull SC said.

"Yes," Witness A replied.

"And the end of the police investigation meant once the accused had been convicted," Mr Turnbull continued.

"Hopefully," the witness replied, smiling.

The trial continues.