Five schoolchildren were killed and several others were seriously injured when a gust of wind blew their bouncy castle into the air at an end-of-term party in Australia yesterday.

Police said the pupils at a primary school in Devonport, northern Tasmania were celebrating the last week of class before the Christmas break when they were thrown from a height of about 10 metres (33 feet).

Earlier police confirmed two boys and two girls from grades five and six -- typically aged about 10-12 years old -- were killed in the incident, with a fifth student later dying in hospital.

Several rescue helicopters and ambulances rushed to the scene after the incident, which occurred around 10 am local time on an otherwise sunny, early summer day.

Images from the school showed attending police officers in tears, and a swathe of blue tarpaulin sheets shielding what officers described as "a very confronting and distressing scene".

A police investigation is under way. Distraught witnesses, friends, family, teachers and first responders are being offered counselling.

Australian Prime Minister Scott Morrison said the incident was "just shattering" and "unthinkably heartbreaking".

"Young children on a fun day out, together with their families and it turns to such horrific tragedy, at this time of year, it just breaks your heart," he said.

"I just want to say, to the parents and families and friends, all who were there, to the other young children there and witnessing these events, I just pray you'll have great family around you and great friends and you can come through this horrific tragedy."