Thousands of firefighters, aided by the army, are battling several major bush fires, and the number of dead is expected to rise as fires are put out.
Arsonists responsible for lighting the fires could be charged with murder, police have said.
Entire towns in Victoria state were destroyed as fires were fanned by extreme temperatures and wind, BBC News reported.
Temperatures are dropping now, but officials fear they will not be able to get the fires under control until there is substantial rain.
"We could still have a lot worse," said Sharon Smee of Victoria's Country Fire Authority. "There's still hot spots out there and there's a lot of people who are really exhausted and tired."
Firefighters have been battling against what are described as the worst conditions in Victoria's history.
The fires have destroyed entire towns and many miles of farm and forestland
John Coleridge from the Alfred Hospital in Melbourne said most of those rescued from the fires had suffered burns.
"They range from minor, just the soles of their feet running away through embers, to people who've got major, life-threatening burns," he said.
"And unfortunately there are some people who will not survive."
The BBC's Nick Bryant in Sydney said police suspect that in at least one case fires have been restarted by arsonists after being extinguished by firefighters.
New South Wales Premier Nathan Rees said arsonists faced a maximum 25 years' jail.
"We will throw the book at you if you are caught," he was quoted as saying by the AFP news agency.
"Some of these fires have started in localities that could only be by hand, it could not be natural causes," Victoria state Police Deputy Commissioner Kieran Walshe was quoted as saying by AFP.
He said there would be a "full, thorough investigation".
At least 700 homes have been destroyed in Victoria and about 14,000 homes are without power.
Most of the people who died came from a cluster of small towns to the north of Melbourne. The BBC's Phil Mercer in Sydney said many charred bodies had been found in cars. It is thought they were trying to escape the fires but were overtaken by their "sheer speed and ferocity".
Some cars appeared to have crashed into one another as people tried to flee the flames.
Victoria Country Fire Authority said the death toll had risen to 108.
At least 18 people were reported to have died in the town of Kinglake, four at Wandong, four at St Andrews and three at Strathewen.
One Strathewen resident told ABC local radio how people had witnessed "absolutely horrific" scenes as they had helped battle the flames.
"The school's gone, the hall's gone... some people left it too late. We've lost friends, and we're just waiting for more - children, loved ones," she said.
The town of Marysville, with about 500 residents, was said to have been burned to the ground, though most residents managed to shelter from the blaze in a local park.
Tens of thousands of firefighters have been trying to contain blazes in two other states - New South Wales and South Australia - but the fires there were largely contained or burning away from residential areas.
The fire service is using water-bombing aircraft to contain fires and thousands of volunteers are using water hoses.
View of fires from plane near Melbourne (Pic: Grant Smith)
Witnesses say the fires have been up to four storeys high (Pic: Grant Smith)
"It's obviously a tragic day and a tragic week in our history," Victorian state Premier John Brumby said.
Late on Sunday, he said he had accepted an offer from Prime Minister Kevin Rudd to send in troops to relieve overstretched emergency crews.
"Hell in all its fury has visited the good people of Victoria in the last 24 hours," said Mr Rudd.
Bush fires are common in Australia, but the current blazes have eclipsed the death toll from what had been the previous worst fire in 1983, when 75 people died on a day that became known as Ash Wednesday.
The leader of the Green party, Bob Brown said summer fires would get worse unless Australia and other nations showed more leadership on reducing greenhouse gas emissions.
"It's a sobering reminder of the need for this nation and the whole world to act and put at a priority our need to tackle climate change," he said.