Melbourne, Jan 18 (IANS): A man has been arrested in connection with the murder of an Israeli student in Australia's Melbourne city, police said on Friday.

Twenty one-year-old La Trobe University exchange student Aiia Maasarwe's body was found in the city's Bundoora suburb on Wednesday morning, reports Efe news.

"Homicide Squad detectives have arrested a man as part of the ongoing investigation into the death of Aiia Maasarwe," Sergeant Julie-Anne Newman said in a statement released by Victoria Police.

"The 20-year-old was arrested in Greensborough by local police working in partnership with homicide detectives about 11.20 a.m.," she added.

The police believe Maasarwe had been out at a comedy club on Tuesday night and was dropped off by friends at a tram stop on Bourke Street in the central business district at 10.50 p.m.

She is believed to have got off the tram in Bundoora, north Melbourne, near her accommodation just after midnight. The stop is about 100 metres from where her body was found.

When the attack took place, Maasarwe was talking to her sister who lives overseas, police said at a Thursday press conference. The sister then heard the sound of the phone falling to the ground and some voices.

"My heart goes out to Aiia's family and friends and everyone whose life she touched. An incredibly shocking, despicable and tragic attack," Australian Prime Minister Scott Morrison tweeted on Friday morning.

A silent vigil will be held for Maarsawe outside the Parliament of Victoria on Friday evening.