Police said a 34-year-old woman who was the mother of at least seven of the children had been taken to hospital with stab wounds but was stable.
Police have not confirmed Australian reports that the children, aged between 18 months and 15 years, were stabbed.
Australian PM Tony Abbott said in a statement it was an “unspeakable crime”.
He said all parents would feel “gut-wrenching sadness at what has happened”.
The house in the Manoora suburb has been cordoned off and detectives are searching the yard.
Police have said it was a “tragic event” but there was no cause for public concern.
They have not made any arrests, but said the injured woman was assisting with their investigations.
Cairns Detective Inspector Bruno Asnicar confirmed to reporters that the woman was the mother of at least seven of the children, but that formal identification of the bodies had not yet taken place.
“We believe the other child is a family member but that is being followed up,” he said.
He said police could not confirm how the children died until coroners’ reports were carried out.
Police are speaking to a range of people, he said, including a man seen near the house earlier in the day, but there are as yet no formal suspects.
Specialist police officers were being brought in from Brisbane, he said, including child trauma experts.
Queensland Police said in a statement earlier that they were called to a residence in Murray Street at 11.20AM local time following reports of a woman with serious injuries.
“During an examination of the residence police located the bodies of the children, all aged between 18 months and 15 years,” said the statement.
Local people have told reporters that the children were found by their elder sibling, a 20-year-old man, when he returned to the house, but police have not confirmed this.
Queensland Premier Campbell Newman said he was “deeply saddened and shocked” by the events.
The deaths come with Australia still reeling from the siege of a cafe in Sydney which ended on Tuesday morning, with the gunman and two hostages dead.
PM Tony Abbott said in his statement that these were “trying days for our country”.
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