Another housemate, Peter James Arthur, 44, has pleaded guilty to murdering Ms Kelly, 39, on January 22, 2016.

In a plea hearing in the Supreme Court in Bendigo on Monday, Crown prosecutor Fran Dalziel said Mr Arthur hit Ms Kelly with a hammer six or seven times in a bungalow out the back of their dysfunctional Lesley Street home in Kangaroo Flat.

He then disposed of her body, dumping it on a dry creek bed outside of the central Victorian town, the court heard.

She wasn't reported missing for 15 days and her body wasn't found for three weeks, in which time Ms Lyons had allegedly enrolled her children in childcare, nominating herself as their mother, another housemate Ronald Lyons as their father and Mr Arthur as "papa".

Ms Lyons, the court heard, had been in a relationship with both men.

Both Mr and Ms Lyons have pleaded not guilty to the murder and face a trial later this year.

Ms Dalziel said Ms Lyons, who exercised some control over the two men, wanted Ms Kelly dead so she could take her four children, aged six, five, four and 11 months.

"Christine Lyons was unable to bear children herself and was desperate for her own," Ms Dalziel said.

Even before the alleged plan to murder Ms Kelly, who'd moved in six months earlier after meeting the trio through a friend, Ms Dalziel said other plans were concocted.

There was an attempt to recruit a 15-year-old girl who was in state care to be artificially inseminated or have sex with Mr Lyons, the court was told, and there was another attempt to claim guardianship over another girl.

The court was told the plan to kill Ms Kelly was hatched in December 2015, when Ms Lyons allegedly told a friend of Ms Kelly's: "I want to make Sam disappear."

As for Ms Kelly herself - an emotionally and financially vulnerable woman - Ms Dalziel told the court she had become increasingly desperate to leave the Lesley Street house.

Ms Kelly had rung her older brother Michael Kelly about a month before her death, telling him: "I need to get out of here. It feels like they're starting to take over", the court heard.

She had also shared her desperation with her social worker, who had been searching for a new place for Ms Kelly and the children to move into.

But attempts to take her life had allegedly begun. Ms Dalziel claimed that on New Year's Day pills had been crushed-up and put in her drink. In the lead-up to the alleged assault, she had again been allegedly drugged, but still hadn't died.

Ms Dalziel said Mr Arthur was allegedly told: "Sooner or later, Samantha has to go, Samantha had to be killed."

Mr Arthur, 44, is a man described his by his lawyer as not being "blessed with brains or looks" who was fighting for Ms Lyons' affections.

"The reality is her affections are diverting from my client back to Ron. My client feels like he's in a struggle to compete for her," lawyer Shane Gardner said.

"Christine is in a position of considerable power."

Ms Kelly was first reported missing by her brother, Michael Kelly, on her baby's first birthday after he realised she had disappeared.

In victim impact statements tendered to court, Ms Kelly's family said she had realised her dream of becoming the mother she never had.

Mr Kelly and his wife have since taken custody of her children on the NSW coast, expanding their family of four.

Mr Kelly said his sister's children came to them scared and confused with nothing but their backpacks. He said the youngest two did not know their own names.

"I now have to raise my nieces and nephew, my sister's children," he said.

"I should be the uncle that turns up with cuddles and kisses, brings them annoying presents on their birthday, teaches them fart jokes and smiles at them because they have my sister's infectious laugh and big nose."

He said the children have been robbed of their mother, and he of his sister.

"She didn't have the chance to realise her dream of becoming a mother that she never had. Although motherhood was taken away from her, in the short seven years she was a mother she produced four of the most amazing children," he said.

The plea hearing before Justice Lex Lasry continues on Tuesday.