In 2010, Renee English was on a Picton ghost tour when she took this photo. She swears there were no children in St Mark's Cemetery, a 90-minute drive west of Sydney, when she took this picture. 

Local legend has it that the two "children" you can see in this photo are David Shaw and Blanche Moon, who died 60 years apart.

Blanche was crushed to death in 1886 when a pile of sleepers that she and a number of children were playing on slipped.

David was the son of a minister who died in 1946 from polio.

English says she was "a sceptic" before undertaking the ghost tour.

"When we were standing at the bank looking into the cemetery I was just snapping away and making jokes about the whole thing," the Port Macquarie resident told The Daily Telegraph.

"I know that when I took that photo there was no one else in the cemetery".

"The only people we saw were a family of four about 10 minutes later but those kids were clinging to their parents the whole time.

"When we uploaded our photos and saw the children all the hairs on my arm stood up and I just went cold all over. That night I couldn't sleep at all and I'm never watching a scary movie again.

"I wasn't a believer in ghosts but now I'm intrigued."

Local historian Liz Vincent conducted ghost tours in Picton, claimed to be Australia's most haunted town, until her death in 2009. Since then her husband John and daughter Jenny Davies have taken up the mantle.

"Picton's just so haunted," Ms Davies said.

"We find people always love to see their photos afterwards because most of these things aren't visible to the naked eye."

One of the tour's most popular figures is Emily, a lady who was hit and killed by a train in 1916 while taking a shortcut through the Redbank Range Tunnel, also known as the Mushroom Tunnel, to visit her brother.

Emily Bollard resided near the railway line and was a single woman aged in her 50s. Before taking her shortcut, she didn't check the timetable and was hit in the tunnel by a train coming from Thirlmere. She died instantly.

"She likes to move among the participants and loves to touch their hair and body, particularly their arms and legs," Ms Davies said.

"Those on the tour often say that they've also felt a cold wind blowing through the tunnel."

Picton has earned the title of Australia's most haunted town as a number of sites around the country town are said to have paranormal activity. The Wollondilly Shire Hall is said to be haunted by three ghosts - a mischievous little boy, a bearded man who wears a hat and suit, and a small girl - who is often heard but not seen.

According to Secret Sydney, the Old Maternity Hospital is another place where locals have reported hearing the sounds of babies crying and spotting an old matron walking around the premises.

The jukebox at the Imperial Hotel apparently plays mysteriously even when it is unplugged.

Over the years a number of people have drowned at the nearby Stonequarry Creek and ever since, visitors have reported hearing sounds of people splashing in the water, even when nobody is actually swimming.