A MELBOURNE man has been killed and a female companion raped by a mob in Papua New Guinea's highlands.

An Australian man has been killed and a woman gang raped by a mob in Papua New Guinea's Western Highlands.

Robert "Bob" Purdy, 62, from Melbourne, died instantly after being shot at point blank range on Monday morning when a group of up to 10 men confronted him at a house on the outskirts of Mt Hagen.

The men then raped a female guest at the house.

The woman, understood to be from the Philippines, was taken to Mt Hagen hospital for treatment.

"The motive of the killing of this innocent Australian is not known at this moment as well as the identity of the killers," Highlands Divisional commander Teddy Tei told the Post Courier newspaper.

Mr Tei said no valuables had been taken from the scene and police could not rule out the possibility that the owner of the house, who is away in Sydney, was the target.

"I condemn the actions of these animals," Mr Tei said.

"This is inhumane.

"We are investigating this very serious incident which is likely to have severe ramifications on the country's image."

Mr Purdy operated a towing business, Cobra Towing, on the Gold Coast for more than 20 years and is understood to have been working in construction while in PNG.

In February Mt Hagen was the site of the brutal murder of Kepari Leniata, a 20-year-old mother who was stripped naked and set on fire in front of a crowd after she was accused of using sorcery to kill a child.

The Department of Foreign Affairs and Trade said consular officials in Canberra were providing assistance to the man's family in Australia.