The 28-year-old man, who is yet to be charged, remained under police guard in hospital in a critical condition on Sunday night.
The man is the father of the three children who died in the blaze, police confirmed on Sunday.
Police believe accelerants were used in a fire that killed three children at a home in Sydney. (Mark Evans/AAP PHOTOS)
Four other children and their mother were being treated in hospital and were expected to survive, police said.
Investigations will continue for some time, with dogs brought in to identify potential accelerants as police rake through the scene.
Neighbours and emergency services rushed to the Lalor Park home in Sydney's west about 1am on Sunday as it was engulfed by fire.
Two boys, aged three and six, were rescued from the burning home but died a short time later.
The body of the third child, a 10-month-old girl, was found after firefighters extinguished the blaze.
Investigators would return to the property on Monday, with a lot of work to do to determine what happened, Detective Superintendent Danny Doherty told reporters.
"However, at this stage, it does appear that the 28-year-old man is responsible for multiple deaths of young lives that have been tragically taken away," he said on Sunday.
Police officers and a neighbour heroically tried to rescue children from the burning home. (Mark Evans/AAP PHOTOS)
Detectives are treating the incident as a domestic-related multiple homicide, he said.
Attempts to enter the burning home were allegedly met with resistance as police officers and a neighbour heroically tried to rescue children from the fire, acting Superintendent Jason Pietruszka said.
"I can confirm during police attempts to get into the property, those efforts were frustrated by a male inside," Mr Pietruszka said.
"That male has been arrested."
Their efforts prevented the loss of more lives, he said, but the fire and the death of three children would have a long-lasting impact.
"There's no other word for it," Mr Pietruszka.
"It's completely and utterly devastating."
