Alistair Shipsey (pictured) who revealed on Sunday the family name is pronounced 'Mil-et' rather than 'Mil-at'

Backpacker killer Ivan Milat's nephew has claimed his dead uncle was a victim whose ashes should have been scattered in the same forest where he murdered his victims.

Alistair Shipsey, who revealed on Sunday the disgraced family name is pronounced 'Mil-et' rather than 'Mil-at', initially suggested his uncle be laid to rest in Belanglo State Forest, south-west of Sydney, where the slain hitchhikers were found in the '90s.

Milat, who was convicted of the murders of seven backpackers and suspected of several others, died in October aged 74 after spending the last few months of his life between his prison cell and a hospital bed, where he was being treated for stomach cancer.

His ashes were scattered of off Sea Cliff Bridge in Wollongong at a private ceremony in early November - less than an hour from the forest.

Mr Shipsey has always maintained Milat's innocence.

Milat is wheeled out of the secure wing at Prince of Wales Hospital by a nurse, under the close guard of two police officers, just months before his death

'He didn't do it, he's innocent, so I thought, well, he's a victim of Belanglo too,' he told The Sunday Telegraph.

'That's the truth that nobody wants to hear. But in the end we made the right choice - he belongs at peace out to sea.'

Even in death Milat continued to cause controversy.

One of Milat's dying wishes was to have Corrective Services NSW pay for his funeral.

But outrage from taxpayers led NSW Corrections Minister Anthony Roberts to step in and ensure his cremation was paid for with money remaining in his prison account.

Milat (pictured) died in October aged 74 after spending the last few months of his life between his prison cell and a hospital bed, where he was being treated for stomach cancer

According to the Daily Telegraph, the killer's brother Bill Milat, whose nickname for Ivan was 'Mac', has started demanding the murderer's remaining money and possessions be returned.

'It's not about the money. At the end of the day Mac wanted me to have his personal belongings and they should be returned to me,' Bill Milat said.

He said the family wants 'closure to get on with our lives' and claimed Corrective Services NSW won't return his phone calls.

Bill also believes his brother was wrongly convicted and insisted his DNA doesn't match the DNA found on the victims.

Milat killed seven backpackers and hitch-hikers between 1989 and 1992, with their bodies found partially buried in shallow graves in the Belanglo State Forest in NSW.

Joanne Walters, 22, (left) was stabbed to death by Ivan Milat. Her friend Caroline Clarke, 21, (right) was shot 10 times as if she was target practice. The pair disappeared in April, 1992

Deborah Everist (left) and Anja Habschied (right) were among Ivan Milat's seven victims. Everist, 19, died after being stabbed multiple times. Habschied, 20, was decapitated

He was handed seven consecutive life sentences for the murders.

In the weeks that followed his death on October 27, Bill was in a tense stand-off with the NSW government over who would pay for the murderer's funeral.

'I'm not going to pay for anything,' Mr Milat told Daily Mail Australia previously.

'I don't care where (he goes) - they can stick him back in Long Bay.'

Mr Milat was handed a letter from his brother, days before his death, which told him 'don't pay for my funeral services or contribute in any way.'

Bill (left) and Chris Milat, relatives of Matthew Milat, leave the NSW Supreme Court during a sentencing hearing in Sydney on Monday, May 21, 2012

Milat always maintained his innocence, signing off every letter from 'Ivan the innocent' (above)

'Please don't pay for my funeral services or contribute in any way,' Milat wrote.

'I have advised the Commissioner of Corrective Services NSW of my wishes.'

Bill vowed to honour his sibling's dying wishes and said he would 'not pay a cent'.

He also claimed the Long Bay Jail chaplain would take care of the arrangements on behalf of the family.

The backpacker killer suggested a pauper's funeral.

Milat was initially jailed in Maitland but he and another inmate planned an escape he was transferred to the maximum security Goulburn Prison.

He remained in Goulburn until earlier this year when he became increasingly sick.

Transferred to the secure prison wing at Prince of Wales Hospital in Sydney, his need for continued treatment saw him moved to Long Bail Prison when not in hospital.

He always maintained his innocence, signing off every letter from 'Ivan the innocent'.

