A one-year-old boy, a four-year-old boy and a four-year-old girl were killed while their 35-year-old mother, who was reportedly driving, is under police guard in hospital.
The ABC have released the names of the young children.
Anger, a four-year-old girl and her twin brother Madit were killed along with their one-year-old brother Bol as a result of the crash.
Awel, their five-year-old sister, remains in a critical condition at the Royal Children’s Hospital.
The car crashed into the lake on Wednesday afternoon and horrified onlookers splashed their way into the water and smashed the windows of the car in an effort to get the children out.
Superintendent Stuart Bateson told reporters “we don’t know why, we don’t know how” the car entered lake.
Supt Bateson said police were unsure if the vehicle was being driven erratically before entering the lake.
“It is pretty early in our investigation,” he said.
“What we do know is that we have a very tragic set of circumstances here and it is going to be a very harrowing investigation.”
The lake, about 38km west of Melbourne’s CBD, is a popular place for children to ride their bikes and scooters.
Police are still trying to understand what led the car to crash into the lake and are pleading for any witnesses who saw the car between 3:30pm and 3:45pm to come forward.