The accident happened on Thursday at the Hillcrest Primary School in Devonport, Tasmania, after a bouncy castle flew more than 30ft into the air following a strong gust of wind.
Five children have now died, and three are in critical condition.
The primary was marking the final day of the school year with a ‘funday’ for the children when the accident happened.
Police in Tasmania have described the scene as “distressing” and eyewitnesses have said it was chaos, with parents running to the school to find out what happened and if their children were safe.
The Australian Prime Minister Scott Morrison has described the situation as “unthinkable heartbreaking”, particularly at this time of year.
It is understood that an investigation is underway to understand exactly what caused the incident.