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AAP
AAP
Politics
Hannah Ryan and Maureen Dettre

NSW premier hopes for Tyrrell breakthrough

Police are looking at bushland about a kilometre from the house where William Tyrrell was last seen. (AAP)

The NSW premier hopes a breakthrough in the case of missing three-year-old William Tyrrell is imminent, as police continue their search in the small town where he disappeared.

Dominic Perrottet said on Wednesday the signs and reporting coming from the police investigation were "very encouraging" and police were doing a "phenomenal" job.

"I think I can speak on behalf of everyone across our state who has been heartbroken by this entire story that we (hope to) have a breakthrough as soon as possible," he said.

He made his comments after NSW Police revealed they had seized a car linked to the case as part of their investigation.

The grey Mazda was seized from a home in Gymea in Sydney's south under a coronial order last week. It's undergoing extensive forensic examination, which could take weeks.

The car reportedly belonged to William's foster grandmother before she died.

It was from her home in Kendall on the NSW mid north coast that the three-year-old boy wearing the Spider-Man suit went missing in 2014, in a case that has attracted national attention.

Wednesday marked the third day of a renewed search for the boy's remains in the small town.

Police turned their attention to an area of bushland about a kilometre from the house where William was last seen, after digging up the garden at the home on Tuesday.

Police used a digger to remove a layer of topsoil.

A moment of excitement when an item was found on Wednesday afternoon was dashed when it turned out to be nothing.

RFS volunteers were on site helping to clear bushland and vegetation, and Australian Federal Police officers were present with ground-penetrating radar and 3D cameras.

NSW Police Deputy Commissioner Malcolm Lanyon said investigators were committed to the probe.

"The NSW Police will not stop until such time as we've investigated every possible lead," he told reporters on Wednesday.

Asked if police were investigating whether William died after falling from a balcony at the house, Police Minister David Elliott said every option was being considered.

"With a mysterious incident like this, every single option has to be investigated, every scenario has to be reviewed and tested," he said on Tuesday.

"Let's hope whatever the conclusion is, (it) gives closure to the families and community."

Police Commissioner Mick Fuller has confirmed there has been a significant breakthrough in the case, saying he was confident police would solve the mystery of what happened to William.

"There is certainly one person in particular that we are looking closely at," he said.

The findings of a coronial inquest into William's disappearance, which concluded last year, are yet to be handed down.

A $1 million reward for information on the case still stands.

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