An ex-rugby league player is suspected of murdering his three children and estranged wife in Australia by burning them alive inside their car, in what police described as one of the most horrific incidents they have encountered.

Officers said 31-year-old Hannah Clarke died in a Brisbane hospital on Wednesday just hours after her three children aged three, four and six were found dead in the car on a suburban street.

Her husband, Rowan Baxter, who also died, allegedly approached the vehicle and doused it with petrol before setting it alight, The Australian newspaper reported.

The paper said Clarke jumped from the burning car and rolled on the ground, saying "he's poured petrol on me".

Officials said she was rushed to hospital with severe burns following the "horrific" incident but later succumbed to her injuries.

Baxter, a 42-year-old former rugby league player for the New Zealand Warriors, was believed to be in the burning vehicle but got out and died on a footpath.

Queensland Police detective inspector Mark Thompson said Thursday that Baxter died as a result of burns and a self-inflicted wound.

"Information that's to hand has led us to believe that the Baxter children and Hannah Clarke were killed and I don't believe there's any suspicious circumstances around the death of Rowan Baxter," he said.

Clarke's sister-in-law, Stacey Roberts, set up a fundraiser to pay for funeral costs and support Hannah's parents, who she said had "exhausted themselves to try and help Hannah escape this monster".

"All those who knew Hannah or had even just met her once would know how much of a beautiful soul she was. Her children (were) her life," Roberts posted on Facebook.

The page has so far raised almost Aus$100,000 ($67,000).

Australian Prime Minister Scott Morrison said the country was "shocked, saddened and devastated" by the tragedy, which has led to an outpouring of grief on social media.

"Hannah and her three children were so senselessly and maddeningly murdered in what has occurred in a terrible act of violence and it just grieves our hearts terribly today," he said.

Natasha Stott Despoja, a former senator and chair of anti-violence group Our Watch, called for stronger action to address violence against women in Australia, which she described as a "national emergency".

"I know people want change, people are angry & sad today," she tweeted. "How long before we stop this slaughter in our suburbs?"

A passer-by who tried to intervene in the situation was also taken to hospital to be treated for facial burns, a Queensland Ambulance Service spokesperson said.

The emergency responders who attended the scene have been stood down from their duties and will receive support, he added.