The body count reached 166 on Tuesday, more than doubling the death toll from Australia's previous worst forest fires in 1983, dpa reported.
Authorities in the south-coast city of Melbourne warned the death toll would continue to climb as army bulldozers cleared a path for forensic teams to enter hamlets cut off by Saturday's inferno.
In tiny Strathewen, which only had a population of 450, at least 26 people were killed when the fire-front raced through.
Forest fires, which are common in the torrid southern hemisphere summer, claimed 75 people in 1983.
In the weekend blaze at least 750 houses were lost, 350,000 hectares of forest blackened and whole towns obliterated. The popular mountain resorts of Kinglake and Marysville, 100 kilometres north-east of Melbourne, have barely any buildings left standing.
Marysville has been declared a crime scene because police believe the fire there was deliberately lit. Police say half of forest fires are deliberately lit.
Insurance company Allianz estimates that industry-insured losses from the fires could top 500 million Australian dollars (325 million US dollars).
With fires expected to burn for weeks, brigades are being drafted in from around the country and even from abroad. New Zealand has sent 100 firefighters.