A wolf-sized otter with crushing jaws once prowled southwestern China, according to scientists, who say the discovery of the animal's fossilised remains could illuminate the evolution of its modern relatives.

The fossils of the huge otter, Siamogale melilutra, including a nearly complete cranium, an assortment of teeth, a mandible and other bones, were found in Yunnan province, said a research paper published in the UK-based Journal of Systematic Palaeontology.

Archeologists discovered the animal's remains in a coalpit in 2010, according to China's Xinhua news service.

The animal lived more than six million years ago and weighed about 50 kilos (110 lbs), far more than modern otters and similar to a modern wolf, the agency said.

It added that the find could help piece together the puzzling evolutionary record of mustelids, the family of carnivorous mammals that includes otters, badgers and weasels.

"The new discovery permits recognition of a rare clade (group) of otters and affords an opportunity to explore relationships among several enigmatic fossil mustelids that have been referred either to as badgers or to otters," said the paper.

US and Chinese researchers involved in the study told US media the large teeth and powerful jaws indicated the animal probably used them for crushing hard objects such as large shellfish and freshwater molluscs.

Siamogale melilutra fossils were first uncovered in 2010, with more finds in subsequent years completing the picture, the researchers said.