The death toll in a Sydney boarding house fire from an explosion has climbed to three, after two more bodies were found in the smoking rubble, with police investigating the blaze as a murder.

“There was an explosion here at Newtown. It is unclear exactly at this stage what the cause of it is,” Assistant Police Commissioner Peter Cotter said on Tuesday.

“We are treating this as a murder. We are treating this as a maliciously lit fire.”

Police were called to the blaze on the corner of Probert and Albermarle streets about 1am on Tuesday and found the two-storey building well alight.

Some 40 firefighters were dispatched to control the raging fire.

They initially found one body inside, while eight residents fled the intense blaze.

Three of them were taken to hospital, including a man in his 80s. He is in a critical condition.

“There was … a man aged in his 80s, who jumped, fleeing from the flames from the first storey window,” said Mr Cotter.

“He suffered some serious leg injuries and was taken to North Shore and unfortunately suffered a heart attack at the hospital. He is in a critical condition whereas the other two occupants are in a stable condition.”

Police said later on Tuesday they had found another two bodies and there were “serious concerns held for a fourth person believed to be inside”.

Injuries for those who escaped the boarding house, comprised mostly of men in their 40s to 80s, included smoke inhalation and minor braces.

Police said they were treating the matter as “suspicious” and wanted to question the boarding house owner.

“We know who he is. We have reached out to him in a series of addresses in Western Sydney and as yet, we have not been able to make contact with him,” explained Mr Cotter.

Seven ambulance crews were sent to the blaze.

“We treated a number of patients for various injuries including burns and smoke inhalation, three of which required hospitalisation,” paramedic Braden Robinson said.

St Vincent de Paul Society NSW chief executive Jack de Groot said it was “a deeply saddening event”, adding a boarding house was a place of last resort.

“Someone living in a boarding house is experiencing a form of homelessness,” he said.

Not enough places were available for people in need of affordable housing and some boarding houses were inadequate.

“The residents will probably struggle finding a new place to stay and that isn’t right,” Mr de Groot said.

“As a community we need to do more to protect our most vulnerable.”

There are 50,000 applicants – representing more than 100,000 people – on the waiting list for social housing in NSW and many more in need of affordable housing.

A number of neighbouring properties were also evacuated.