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The bodies of Nilesh Sharma (34) his wife Pritika (32) Divesh (5) and Divya (3) were found at their Glen Waverley home when police called to make a welfare check on Tuesday.
Post-mortem examinations will be carried out today.
The Fijian-Indian family, which moved to Australia 15 years ago from Fiji, had lived in Glen Waverley for at least two years and appeared to have been a normal, happy couple, Australian news agency AAP reported.
Police said the deaths are being treated as a murder- suicide with officers stressing that no suspects are being sought. The reports said the two children were found in beds in separate bedrooms while Nilesh was found hanged.
The incident came into light when the children failed to attend family day care centre. A cousin contacted by the centre alerted police, who searched the home last morning.
Homicide detective Senior Sergeant David Snare said "You`ve got two adults and two children. It`s a family unit and it`s just nasty, that`s all." He indicated police are not looking for suspects.
It was uncertain how long they had been dead, but relatives said they attended a family function last Saturday night. According to reports, the children were smothered.
Snare said police will investigate whether the couple had any relationship problems.
Investigators are also looking at a serious car accident involving the family last December.
Sharma was driving when their car ran off the road in the Dandenong Ranges and struck a tree. The family narrowly escaped death as passers-by dragged them from the wreck.
According to a family member, the car exploded moments after they were pulled out.
