Letter gives new insight into Ned Kelly

Ned Kelly had a "soft and mild looking face and eyes" and cried "I am done I am done" when finally shot by police, according to a 133-year-old letter that gives new insight into the infamous bushranger.

Kelly staggered when hit by the force of rifle bullets, the eyewitness reported, "but it was only when they got him in the legs and arms that he reluctantly fell".

The account was from Scotsman Donald Gray Sutherland who was working at the Bank of Victoria in Oxley when Kelly made his last stand 133 years ago.

The previously unknown letter described Kelly as a "powerful man" who lay on a stretcher "quite calm and collected" after sustaining five or six gunshot wounds in the stand-off with police.

Sutherland goes on to describe the famous armour - weighing about 97 pounds or 44kg - that caused police bullets to slide off Kelly "like hail".

"They were firing into him at about 10 yards in the grim light of the morning without the slightest effect," he wrote.

Sutherland had heard of an affray involving the Kellys while in Oxley and went to nearby Glenrowan, in northeast Victoria, to see the "desperados" who caused him "so many dreams and sleepless nights".

He then documented what he saw in a letter to his family.

Now, his descendants have handed that letter dated July 8, 1880 over to the State Library of Victoria.

A lock of hair from Kelly's horse was enclosed with the letter.

State Library of Victoria chief executive Sue Roberts said the letter is a remarkable document.

"This letter is a very personal account of events that have become part of Australia's folklore," she said.

"It will join Ned's armour, Jerilderie Letter and other important items in our Kelly collection - one of the largest and most significant in the world."

The letter will be on display in its Changing Face of Victoria exhibition from Monday.

It can also be viewed online with a full transcript on the State Library website.