SYDNEY : Bullets bounced off Ned Kelly "like hail" as the Australian outlaw made his last stand, according to an eyewitness account that has surfaced more than 130 years after his capture.

The dramatic retelling of the Kelly Gang's 1880 shootout with police in the town of Glenrowan is contained in a letter from Scotsman Donald Sutherland to his family, donated to the State Library of Victoria where it has just gone on display.

Kelly is one of Australia's most enduring legends, celebrated as a folk hero and symbol of Irish-Australian rebellion against British colonial authorities, with his exploits depicted in art, literature and film. According to Sutherland, a bank clerk in a town near Glenrowan who lived in fear of being robbed by the notorious band of bushrangers, Kelly and his men were "desperados who caused me so many dreams and sleepless nights".

The letter gives a detailed account of the infamous siege that ended the gang's reign of terror in colonial Australia.

"The police thought he was a fiend seeing their rifle bullets were sliding off him like hail," Sutherland wrote.

"They were firing into him at about 10 yards in the grim light of the morning without the slightest effect."

Protected by makeshift armour covering his head and chest which "alone weighed 97 pounds", Kelly reeled but did not relent until he was shot in parts of his body not protected by his home-made metal outfit, Sutherland wrote.

"The force of the rifle bullets made him stagger when hit, but it was only when they got him on the legs and arms that he reluctantly fell exclaiming as he did so, 'I am done. I am done'," Sutherland wrote.

"Ned does not at all look like a murderer and bushranger," he added. "He is a very powerful man aged about 27, black hair and beard with a soft, mild-looking face and eyes, his mouth being the only wicked portion of the face.

"Poor Ned, I was really sorry for him. To see him lying pierced by bullets and still showing no signs of pain."

Kelly's sisters surrounded him, "crying in a mournful strain at the state of one who, but the night before, was the terror of the whole colony," added Sutherland.

"The Kellys are annihilated. The gang is completely destroyed," he wrote.

He enclosed with the letter a lock of hair from the tail of Kelly's horse "who followed him all around the trees during the firing. He said he wouldn't care for himself if he thought his mare safe."

Victoria's state librarian Sue Roberts said she was delighted that Sutherland's family chose the institution to look after the document.

"This letter is a very personal account of events that have become part of Australia's folklore," she said.

Kelly was the only one of his gang to survive the shootout at Glenrowan due to his homemade suit and helmet of plate metal armour. He was hanged at the Old Melbourne Gaol later that same year.

The Kelly Gang had been officially outlawed after the deaths of three policemen at a gunfight at Stringybark Creek in 1878, and at the time of the siege they could be shot on sight by anyone.

Today, paintings by renowned Australian artist Sidney Nolan depicting Ned Kelly are among the most popular exhibits in the National Gallery of Australia, while Rolling Stones frontman Mick Jagger immortalised the bandit in the 1970 film "Ned Kelly".

Kelly's remains were finally buried beside those of his mother in the rural cemetery at Greta, near to Glenrowan, earlier this year, after being retrieved from a mass burial pit at the gaol and identified through DNA testing. His skull has never been found.