Tomas Cugurno-Pfabe is charged with the murder and armed robbery of 43-year-old Bradley Crawford in his caravan at Scoresby in September 2019.

The 26-year-old was arrested three months later.

He is accused of telling undercover officers placed in his police cell he hit Mr Crawford's head twice with a hammer.

Cugurno-Pfabe also allegedly admitted to taking the dealer's ice and cocaine while a friend held the man in a chokehold.

He allegedly said he "smashed" the drugs and would flee to Tasmania if released from custody.

Cugurno-Pfabe was granted bail in Victoria's Supreme Court on Tuesday, partly because of court delays due to the COVID-19 pandemic.

His lawyers had argued Mr Crawford may have died from his chronic lung disease, unhealthy lifestyle and drug consumption.

Medical experts were unable to determine what caused his death.

Cugurno-Pfabe's lawyers also said facial injuries the dealer was found with may have come from a fall following the assault.

The court was told Mr Crawford's caravan appeared to have been ransacked - a box of cocaine was missing and a rubber mallet was found with blood and hair on it.

Judge Lesley Taylor said the prosecution case for armed robbery looked very strong.

But she added the same could not necessarily be said for the murder charge.

Prosecutors feared Cugurno-Pfabe risked fleeing or committing crimes on bail.

But Judge Taylor noted he had not gone to Tasmania when he was released from custody last year, or in the eight months before charges were laid.

She ordered the man be bailed to live with his family, abide by a curfew and report to police, and undertake drug screenings three times a week.

Cugurno-Pfabe must also undergo counselling, not contact witnesses in the case and surrender any travel documents he has.

Two other men, Benjamin Nagy and Jake Oldis, both 23, are also charged with Mr Crawford's murder and armed robbery.

Australian Associated Press