Victoria state Police Commissioner Christine Nixon launched the nation's biggest arson investigation, dubbed "Operation Phoenix", vowing to catch anyone who started a blaze.
The bushfires which swept through Victoria on Saturday night were "suspicious" because there were no natural events such as lightning which would have sparked the blazes, police said.
Authorities said anyone found guilty could face manslaughter or murder charges.
"The laws of the state provide that they can be put away and put away for life," said Prime Minister Kevin Rudd. "My own personal view is they should be allowed to rot in jail. This is unspeakable murder on a mass scale."
The disaster area, more than twice the size of London and encompassing more than 20 towns north of Melbourne, has been declared a crime zone by officials. Police tape flutters around charred houses where bodies have been found.
At least 181 people have been confirmed killed in the fires, but officials say the toll will rise.
"There are still a large number of people, in excess of 50 ... who the coroner believes are already deceased, but are not yet identified," Victorian Premier John Brumby told reporters.
"This is going to be a significant number, it will exceed 200 deaths."
About 25 fires were still burning in Victoria today, with a dozen towns placed on alert as strong winds flared.
"The fires are nowhere near controlled for people to let their guard down," said emergency official Kevin Monk.
The fires have increased pressure on the prime minister to take firm action on climate change. Scientists blamed global warming for conditions that fuelled the disaster.
"This week's tragedy shows that we are now dealing with a changed climate in Australia and it is now apparent to all just how much we stand to lose," Greenpeace campaigner Trish Harrup said in a statement.
Major bushfires are not unusual, however.
"The fire weather experienced on Saturday ... although infrequent, is not unexpected, as on average this extreme fire weather occurs every 5 to 20 years," said Justin Leonard at the Commonwealth Scientific & Industrial Research Organisation.
Australia is particularly vulnerable to climate change because of its hot, dry environment, but is dependent on coal-fired power. Rudd has set a target to cut overall greenhouse gas emissions by only five per cent by 2020.
Stories of horror, courage and luck emerged as shocked townspeople rallied to rebuild their shattered lives.
One woman told Australian television how she and her children survived by hiding in a wombat hole in the ground. Many Australian animals survive bushfires by burrowing.
Ross Buchanan lost his two children in a blaze in the town of Kinglake, where more than 30 people died. He had taken them to his in-laws in another town, where he thought they would be safe.
His children died when fire swept through the other town while Buchanan battled to save his Kinglake home.
Victoria has ordered a Royal Commission of Inquiry to probe all aspects of the bushfires, including safety guidelines.
Officials say the golden rule of surviving forest fires is to evacuate early or stay and defend homes, but experts say that it appears many victims panicked and fled at the worst time. Some were incinerated in cars as they tried to outrun the flames.
"Our research has shown that fleeing at the last moment is the worst possible option. This is where most people have died or been injured," said John Handmer at the Bushfire Cooperative Research Centre.
Australia is the most fire-prone country on earth, say scientists, and most of its bushfires are ignited by lightning.
Fire officials monitor lightning strikes and any fire that does not correspond with a strike is assumed to be started by people, either accidentally or deliberately.
The bushfire tragedy is the worst natural disaster in Australia in 110 years. The previous worst bushfire was the Ash Wednesday fires of 1983 which killed 75 people.
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