Police sources have confirmed the deaths are a murder suicide.
Two adults were found outside the house and the other five bodies were discovered inside at about 5.15am this morning.
Detectives from the Major Crime Squad have travelled to the town, about 270 kilometres south of Perth, as part of the investigation.
Two firearms were located at the scene.
Commissioner Dawson announced the discovery at a media conference in Perth, describing the deaths as a tragedy.
He said a "male person" connected to the property had phoned police shortly before they attended.
"The loss of any life is tragic, but four children and three adults, this is a significant tragedy," he said.
"This will be a very large scale and detailed investigation.
"We have no information to say there are any other public safety concerns at this stage."
The ages of the children and adults have not been revealed.
Neighbour Richard Dosser said he had spoken to one resident of the house, who is a farm maintenance worker, about a job he had.
"I was talking to him on the phone last night, I was going to ask him to come over tomorrow," he said.
"He seemed very vague."