The teenage relative of notorious Australian serial killer Ivan Milat, currently in jail for murdering backpackers in the 1990s, has pleaded guilty to the brutal axe slaying of another teenager.

The boy, who cannot be named for legal reasons, has admitted killing 17-year-old David Auchterlonie.

The young teenager's bludgeoned and partially buried body was found in Belanglo State Forest, south-west of Sydney, last November.

In a chilling twist, Auchterlonie's body was found in the forest Milat's had used to dump the bodies of the seven backpackers he killed between 1989 and 1992, during his killing spree.

Papers filed with Sydney's Campbelltown Children's Court, reportedly describe the teenager as boasting about the killing, allegedly telling one of his friend, just one day after the killing of Auchterlonie ''You know me, you know my family... I did what they do."

He allegedly went to Belanglo's forest on the night of 20 November 2010, accompanied by Auchterlonie and two other friends.

A conversation between Auchterlonie and his future murdered was recorded in a footage taken on one of the friend's mobile phone, the BBC reported.

The teenager accuses Auchterlonie of telling people about money he had stolen, which the victim vigorously denied and according to court papers, the accused lured Auchterlonie out of the car before swinging an axe into his torso.

The accused, helped by one friend, is then said to have covered the victim's body with branches before leaving the forest along with the two other friends.

According to reports from the court, the teenager who is due to be sentenced on 2 December 2011 and could face a life sentence, did not show any emotions when his lawyer entered a guilty plea.