Investigators on Tuesday found the remains in bushland near Dargo.
"The remains are yet to be formally identified and it is expected this process will take some time," police said in a statement on Tuesday.
The find comes on the third day of the search and a day after specialist officers arrived in Dargo as the operation ramped up and zeroed in on the specific area.
It has been one of the force's most high profile cases in recent years.
Excavators were seen on their way to the crime scene early on Tuesday morning.
At the scene, the excavator dumped dirt on a blue tarp before forensic officers sifted through it - setting any potential bone fragments aside.
Police began their search on Sunday in bushland north of Dargo, a remote town in the alpine region, less than 40 kilometres from where the couple were camping together when they went missing in March 2020.
Investigators were told they were camping together at Wonnangatta River near the camping ground.
Greg Lynn, 55, has been charged with two counts of murder and is now at Melbourne Assessment Prison.
While announcing Lynn's charges last week, Assistant Commissioner Bob Hill warned the police investigation was "far from over".
"We are hopeful that we will locate the remains of Mr Hill and Ms Clay ... and provide closure to their families," he told reporters.
Mr Hill and Ms Clay were last heard from in March 2020 when Mr Hill, an experienced outdoorsman, made a call via high-frequency radio saying he was at Wonnangatta Valley.
Campers found Mr Hill's car destroyed by fire at their campsite near Dry River Creek Track on March 21.
Police also want to speak to anyone who was in the Wonnangatta area about that time, including "campers, 4x4 daytrippers, hunters, fishermen or trail bike riders", regardless of whether they saw or heard anything.
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