Two bodies were found on Monday morning after a blaze broke out in the early hours at a home in the small town of Bowen Mountain, on the foothills of the NSW Blue Mountains.
They are yet to be formally identified but police believe they are two children who were unaccounted for after their father and four siblings escaped the inferno, which caused a roof to collapse.
One body was found on the top floor of the house and the other discovered downstairs, NSW Police Superintendent Natalie Roberts told reporters.
Supt Roberts said the rest of the family managed to escape the blaze, which happened on the morning they were due to move to Queensland.
The mother of the children - who range in age from three to 16 - had been on her way to their new home in Queensland at the time of the fire, she said.
"Our thoughts and prayers are with the families, the siblings and with the broader community," Supt Roberts said.
Neighbours tried to help with initial efforts to fight the fire but couldn't get inside the property due to the intensity of the blaze, authorities said.
The fire is not currently being treated as suspicious, Supt Roberts added.
When firefighters arrived, the blaze had already burned through much of the roof cavity of the house and caused some structural damage, Rural Fire Service Superintendent Jonathon Hill said.
About 60 firefighters from Fire and Rescue and the Rural Fire Service were needed to bring the fire under control about 3.30am, but many were forced to withdraw before the roof caved in.
"When firefighters arrived, we had a fully developed fire ... with structural collapse already occurring," Supt Hill said.
"It was deemed too unsafe for firefighters to make entry, to conduct any kind of rescue or search."
Other family members had already evacuated from the house by the time emergency services arrived, Fire and Rescue NSW Assistant Commissioner Andrew Faunce said.
Family members had informed firefighters that there were still people inside the burning structure, he said.
Mr Faunce urged people to ensure they have a winter fire safety plan, and check that their smoke alarms are in working order.
Supt Roberts confirmed a father and four children who escaped the blaze were taken to Nepean Hospital for smoke inhalation and minor burns.
Officers have established a crime scene at the home, with an investigation underway into the cause of the fire, NSW Police said earlier.