Police are scouring waters off Port MacDonnell, on South Australia's Limestone Coast, in a desperate search for the infant.
They were alerted to an abandoned car left with its engine running near Cape Northumberland about 11.15am on Monday.
Officers spotted the bodies of a woman and small child in the ocean a short time later and they were retrieved with assistance from local fishermen.
"At this time, there is no information to suggest that any other persons are involved in the incident and reports will be prepared for the coroner," police said in a statement on Tuesday.
Detectives from the Major Crime Investigation Branch and specialist forensic officers had travelled to the scene.
The 36-year-old woman was from Compton, a small community near Mount Gambier. The age of her older child has not been released.
A search operation for the missing baby resumed on Tuesday morning off Cape Northumberland, the state's southernmost point.
State Emergency Service duty officer Ian Bonython said "very dangerous conditions" were hampering the search effort.
"There are very rough seas, making it very difficult for marine vessels to get in close to shore," he told AAP.
"We have a drone down there, but it's unable to fly because of high winds and we're hoping to get that up later in the day if conditions improve."
Police from the Water Operations Unit, and volunteers from the Country Fire Service and SES are assisting with the search.
On Monday night, local police chief Superintendent Trent Cox said the missing child was aged under one.
"In any conditions, that would cause great concern about the child's ability to survive," he said.
"We're keeping an open mind about everything, but I don't hold out great hope."
Police are seeking information from anyone who saw the woman's car, a white 2015 Isuzu MUX with SA Registration S592 BJR, or has any dashcam footage to contact Crime Stoppers.
"The reason we've made that public appeal is that we're trying to build a picture of the woman's movements leading up to her arriving at Cape Northumberland," Supt Cox said.
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