Victoria's state coroner will investigate the murder of Sarah Cafferkey, in an inquest that will include looking at what roles others played in helping Steven Hunter dispose of the young woman's body.

Judge Ian Gray told the Coroners Court on Tuesday he would hold a formal inquest into Ms Cafferkey's November 2012 death, and that the investigation would also examine whether Hunter should have been monitored more closely while on parole.

Hunter attacked and killed Ms Cafferkey, 22, with a hammer and knife in his Bacchus Marsh unit on November 10, 2012.

The pair had spent part of that day drinking alcohol and smoking the drug ice together.

Ms Cafferkey's body was discovered in a wheelie bin outside a Point Cook home seven days later.

Hunter had a long criminal history - including a stint in prison for the 1986 murder of colleague Jacqueline Matthews - and had completed a period of parole 11 days before he attacked Ms Cafferkey. Previous court hearings have heard it was unclear whether Ms Cafferkey knew Hunter had been jailed for murder.

Ms Cafferkey's family have long pushed for an inquest, in a bid to find out who helped Hunter dispose of her body and to seek answers to questions about how violent offenders on parole are monitored by authorities.

Outside court Noelle Dickson, Ms Cafferkey's mother, welcomed news of an inquest.

She said police never followed up investigations into people who were questioned, and believed those people should be charged.

"After reading the brief I feel that there is a lot of evidence that shows that other people were involved. So they should be held accountable for that," Ms Dickson said.

Michael Mori, a member of the family's legal team, said it was vital to get answers about the extent of the monitoring of Hunter while he was on parole.

"I really do think that it needs to be scrutinised on how Community Corrections is monitoring these dangerous people," he said.

"Is drug testing happening over the entire parole period? That's a big question. You'd expect someone who was a violent offender and has had problems with substance abuse, and that's connected to him in prior offending.

"Is drug testing happening during the entire parole? I think most of the public would expect that it's happening. We're going to find out if that's the case."

Judge Gray said the inquest would focus on both the police investigation into the disposal of the body, and Hunter's period of parole following his completion of a jail term for assaulting a man and holding him hostage.

Barrister Fiona McLeod, SC, representing Ms Cafferkey's parents, told the court the family was still in distress at not knowing who helped Hunter dispose of the body, given no one else had been charged with any offences.

Two people were interviewed by police in relation to assisting Hunter after the murder, the court heard, but both refused to answer questions. Police concluded there was insufficient evidence to charge anyone other than Hunter.

Ms McLeod said the family was also concerned that Hunter was not monitored closely enough while on parole between April 2011 and the end of October 2012, given his drug use and links with associates during the period. Police also investigated claims Hunter discharged a taser at a former partner in September 2012, but he was never charged, the court heard.

Ian Freckelton, QC, for the state of Victoria, told the court Hunter had abided by all the conditions of his parole and had not recorded any breaches other than a speeding ticket.

He said there had been no identifiable flaws in the way authorities monitored Hunter while he was on parole, and questioned whether anything constructive would come from an inquest given the parole system had undergone reforms since 2011 and those improvements were in place.

In 2013 Ms Cafferkey's family sought for her death to be part of an inquest into a cluster of murders committed by parolees, but Judge Gray ruled at the time he would hold a separate inquest into her death given Hunter had completed his parole.

Ms Dickson said she would continue to push for answers over the death of her only child.

"I will continue to fight because, you know, I think for the safety of our community we need to make sure that the government and the governing bodies are doing what they should be doing to keep us safe," she said.

The details of the police investigation into the disposal of Ms Cafferkey's body would likely be aired through a statement presented to the court, Judge Gray ruled.

The inquest is set to start on July 29 and run for three days.