A man is being questioned and is expected to be charged over the murder of Karlie Pearce-Stevenson, as investigators begin to shed light on the mysterious killing of the young mother and her daughter Khandalyce Kiara Pearce.
The 41-year-old was arrested at Cessnock police station on Wednesday, police said.
Inquiries into the brutal murder of Pearce-Stevenson's two-year-old daughter continue.
Ms Pearce-Stevenson's body was discovered in the Belanglo State Forest in NSW in 2010 and Khandalyce's remains were found near a suitcase beside a South Australian highway five years later.
It is believed the mother and daughter were killed in December 2008 at different times and in different locations.
The arrest comes after police on Tuesday announced Ms Pearce-Stevenson's identity, bank account and mobile phone were used for years after her death to mislead family and defraud social services