Paramedics were called to the house, where they found the three bodies, said New South Wales state Ambulance Service spokeswoman Fiona Kruit.
Cowra Mayor Bruce Miller said the children were aged 7 and 5. Their mother, Shelley Walsh, was a police officer who worked in a nearby town.
Walsh was attacked as she returned to the house and was able to flee to neighbor Terry Lovett's home, bleeding from a deep gash on the side of her head, Lovett told Australian Broadcasting Corp.
Lovett said the elderly man and his wife often looked after the children when their mother went to work in a nearby town.
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