Wellington - The body of Australian tourist Akshay Miranda, 22, who was trapped under 100 tons of ice when part of the terminal face of New Zealand's Fox Glacier collapsed, was recovered on Thursday, police said.

He was killed instantly with his brother Ashish, 24, on January 8 when they ignored warning signs and crossed a barrier to get a closer look at the glacier while on vacation with their parents from their home in Melbourne.

The body of Ashish was recovered at the time but melting ice meant it was too dangerous to find his brother.

Police said Akshay's body was found washed on up on a gravel island in the Cook River, 10 kilometres downstream from the glacier face where the pair died.

"He was lying on his back with his arms by his side," Constable Tony LeSueur told reporters.

He said the point where the river left the glacier had moved about 200 metres downstream and a larger volume of water had washed through the icefall, releasing the body.

A rental car company which charged the costs of relocating the family's rental car to the grieving parents, Ronnie and Winnie Miranda, backed down after a storm of protest in New Zealand and Australia.

Prime Minister John Key dubbed the claim "crass at best" and tourism spokesmen said the publicity was potentially harmful to their industry.

Reports said the family had no travel insurance and the charges were waived. (dpa)