The backpacker murderer died in the hospital of Long Bay Jail two weeks ago after being diagnosed with oesophageal and stomach cancer in May, leaving his family with a letter insisting the NSW government pay for his funeral.

However, the 74-year-old's final wish has been denied and he was cremated on Friday - with the government reimbursing the cost of the service from Milat's prison account.

NSW Corrections Minister Anthony Roberts confirmed the murderer did not get the taxpayer funeral he had demanded on Sunday.

"Ivan Milat caused immeasurable pain and suffering to his victims and their families," Mr Roberts said in a statement on Sunday.

"He stole hundreds of years away from young innocent lives.

"His corpse has now been unceremoniously incinerated and he will pay for it. It has already been arranged for the full reimbursement of costs to be paid from his prison account. His last wish has been emphatically denied and he can now rot in hell where he belongs."

Australian Associated Press