Australians are mourning a "horrific" national tragedy after five children were killed in a bouncy castle accident, PM Scott Morrison has said.

The children fell about 10m (32ft) after a wind blew the castle skywards at a Tasmania school fair on Thursday.

Police identified the victims as 11-year-old Addison Stewart, and 12-year-olds Zane Mellor, Jye Sheehan, Jalailah Jayne-Maree Jones, and Peter Dodt.

Three other children remained in a critical condition on Friday.

Another injured child has been discharged from hospital.

Police said the parents of the victims did not wish to speak publicly, but other relatives have given tributes online.

Peter Dodt's aunt Tamara Scott wrote the young boy "was full of life and adventures".

An aunt of Addison Stewart, Meg Aherne, said: "I don't even know what to write at this stage. Everyone is devastated, she was always such a sweet, kind, old soul."

Zane Mellor was described by a family friend as a "gorgeous boy" and a "beautiful, caring, gentle soul".

Mr Morrison called it a "terrible tragedy" and said "as a parent there are no words".

The accident at Hillcrest Primary School has shattered Devonport - a city of fewer than 30,000 people.

There would be "few people if any in Devonport that would haven't had a connection to one of those families, to that school", Mr Morrison said.