At least 84 people were killed and entire towns razed in the worst wildfire disaster in Australian history, described by Prime Minister Kevin Rudd as "hell in all its fury".

People died in their cars as they attempted to escape the inferno — smouldering wrecks on roads outside this town told a tale of horror — while others were burnt to death in their homes.

The toll looked set to rise further as medics treated badly burned survivors and emergency crews made it through to more than 700 houses destroyed by the fires, some of which have been blamed on arsonists.

Thousands of survivors jammed community halls, schools and other makeshift accommodation as troops and firefighters battled to control huge blazes fed by tinder-box conditions after a once-in-a-century heatwave.

"Hell in all its fury has visited the good people of Victoria in the last 24 hours. Many good people lie dead, many injured," Rudd told reporters, deploying army units to help 3000 firefighters battling the flames.

The number of dead rose steadily throughout Sunday as rescue crews reached townships that bore the brunt of the most intense firestorm northwest of Melbourne, which survivors likened to a nuclear bomb.

The worst in history

The previous highest death toll in Australian wildfires was 75 people killed in Victoria and neighbouring South Australia in 1983 on what became known as Ash Wednesday.

The latest fires in Australia's southeast flared on Saturday, fanned by high winds after a heatwave sent temperatures soaring to 46 C, and continued to burn out of control on Sunday.

They wiped out the pretty resort village of Marysville and largely destroyed the town of Kinglake north of Melbourne, with houses, shops, petrol stations and schools razed to the ground.

Marie Jones said she was staying at a friend's house in Kinglake, where at least 18 people perished, when a badly burnt man arrived with his infant daughter saying his wife and other child had been killed.

"He was so badly burnt," she told the Melbourne Age's website. "He had skin hanging off him everywhere and his little girl was burnt, but not as badly as her dad, and he just came down and he said 'Look, I've lost my wife, I've lost my other kid, I just need you to save (my daughter).'"

Desperate to escape

An AFP photographer who made it into Kinglake described a road strewn with wrecked cars telling of desperate, failed attempts to escape.

The cars appeared to have crashed into each other or into trees as towering flames put an end to their desperate flight from the town.

Some did not even make it onto the road, said Victoria Harvey, a resident waiting at a roadblock to be allowed to return to the site of her destroyed home.

She told reporters of a local businessman who lost two of his children as the family tried to flee.

"He apparently went to put his kids in the car, put them in, turned around to go grab something from the house, then his car was on fire with his kids in it and they burnt," she said.

In Kinglake scores of homes were levelled, some with just the roof lying flat on the ground where the house had stood.

The petrol station and shops were also destroyed and the town was deserted except for police and forensic experts.

Police Deputy Commissioner Kieran Walshe said there was no doubt that arsonists were behind some of the fires.

"Some of these fires have started in localities that could only be by hand, it could not be natural causes," he said.

Police have warned that arsonists could face murder charges.

The government's Australian Institute of Criminology released a report last week which said half the nation's 20 000 to 30 000 bushfires each year are deliberate.

AFP