A NSW man is expected to be charged over the murder of Karlie Pearce-Stevenson.
The 41-year-old was arrested at Cessnock police station on Wednesday and "is expected to be charged with Karlie's murder," police said.
Inquiries into the murder of her daughter Khandalyce Kiara Pearce continue.
The arrest comes after police on Tuesday announced Ms Pearce-Stevenson's identity, bank account and mobile phone were used for years after her death to mislead family and defraud social services.
Almost $100,000 was spent or withdrawn from the 20-year-old's bank account between November 2008, when she was last seen, and March 2012.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
A female pretending to be Ms Pearce-Stevenson had conversations with family members on several occasions and duped them into transferring money into her account.
It was also revealed that a woman in a wheelchair had impersonated Ms Pearce-Stevenson in a Centrelink interview in Adelaide in 2010.
Police believe at least one man and two women were involved in the fraud, and that at least one of them were responsible for the murders.
Ms Pearce-Stevenson's body was discovered in the Belanglo State Forest in NSW in 2010 and Khandalyce's remains were found near a suitcase beside a South Australian highway five years later.
It is believed the mother and daughter were killed in December 2008 at different times and in different locations.
A multi-state investigation has been under way since police linked the two bodies this month with fresh DNA evidence.
