Zahra Baker's US stepmother has struck a deal that saves her from being executed or sentenced to life in prison if convicted of an offence related to the 10-year-old Australian girl's death, according to US reports.

North Carolina prosecutors agreed to the deal with Elisa Baker in return for her help with the murder investigation.

Soon after the deal was made, Zahra's dismembered remains and prosthetic leg were found by search teams in various bush locations outside the town of Hickory, where Zahra lived with her biological father Adam Baker and stepmother Elisa Baker.

The 10-year-old was born in Wagga Wagga but moved to the US with her father.

It is believed Elisa Baker led police to Zahra's remains and prosthetic leg.

Zahra was reported missing on October 9 and Elisa Baker was arrested a day later. She has been held in a North Carolina jail since on an obstruction of justice charge related to a fake ransom note and charges unrelated to Zahra's disappearance.

Hickory police have not charged anyone in connection with Zahra's death, but have not ruled Elisa Baker and Adam Baker out as suspects.

Under the deal, reported by North Carolina TV station WSOC, prosecutors agreed not to charge Elisa with first-degree murder, meaning that if she's convicted, she would not face the death penalty or life in prison without parole.

Locals are outraged by the deal and point to the horrific life Zahra, who had her leg amputated following bone cancer, was forced to endure.

"This child suffered from cancer. I don't think that a second-degree murder charge is justice," Sherrie Rowell-Monnell, who visited a memorial dedicated to Zahra, told the Hickory Record newspaper.

"This child's body was dismembered and put in awful places. I think if I had a decision, it would be first-degree murder and the death penalty."

- AAP