The body of a three-year-old boy has been found in a large dam at a rural property in Victoria's south-west.

Police search-and-rescue divers found the boy's body late on Sunday after he had been missing for more than seven hours from the 10-hectare property in Digby, west of Hamilton.

The child was last seen playing with his siblings near the dam about 2pm on Sunday.

Family members contacted police after discovering the boy's shoes stuck in mud on the banks of the dam.

Police will prepare a report for the coroner.

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