Destroyed ... two kids were killed in the fire
The kids, named locally as Niamh, 5, and two-year-old Cayden, died when a blaze ripped through the end of terrace house.
Neighbours said their mum Fiona Adams had been taken to hospital and escaped with an eight-month-old baby.
Police in Derbyshire said the fire service were called to the house in Buxton just after 11.45pm last night.
Assistant Chief Constable Steve Cotterill said police had already been called to the house after reports of noise and nuisance in the garden.
He said nothing was found when officers attended.
He said the incident had been referred to the Independent Police Complaints Commission.
The fire-ravaged end-of-terrace house was today cordoned off as the probe continued.
Its roof was completely burnt through and upstairs windows and front door clearly destroyed by fire.
Onlookers gathered in the wake of the tragedy, some bringing flowers to the scene.
Neighbour Karen Jackson, who has known Fiona for seven years, said she had been at the scene since around midnight last night.
She said: "My friend Fiona's cousin told me about it and I came straight out.
"Fiona had already gone to the hospital, Cayden and Niamh were still in the house, they were trapped.
"They were brilliant, a lovely family. Fiona loved the kids to bits, they would do anything for the kids.
"Everyone liked them, everyone. They didn't have any enemies.
"It's heartbreaking, I'm still in shock now. I just feel numb."
Floral tributes and teddy bears dedicated to Niamh and Cayden were placed at the scene.
One read: "Cayden, rest in peace little man."
Another said: "Sleep with the angels little darlings, God bless."