Six detectives are examining the bus stop at the corner of Ford and Mouser roads, Grahamvale, near Shepparton.

Stunned neighbours were still coming to terms with the discovery in the quiet street.

Liana Trimboli told reporters the news came as a shock on her 19th birthday yesterday.

"This is very serious. My brother and sister catch the school bus each day, but they don't want to catch it again, that's for sure," she said.

"We haven't seen anything but it's awful, I didn't sleep too well last night."

The bus stop is a regular pickup point for country school children.

A post-mortem examination will be conducted this morning, with details to be released later today.

The baby's body lay in the bag for at least 10 hours before a local man found it, dressed in a jumpsuit and wrapped in a blanket, about 5.30pm (AEST) yesterday.

Homicide detectives are investigating the possibility the baby was abandoned at the bus stop and died of hypothermia or that its panicked parents dumped the body there after it died of natural causes.

Police said a witness saw the bag at the bus stop at 7.45am yesterday and they were trying to determine exactly when it was left there.

They said the baby may have been as young as a week old and was found by a man putting out his bins on a property near the bus shelter.