Two family groups who knew each other were at the Royal Daylesford Hotel sitting in the beer garden when a BMW SUV came down the street, mounted the kerb and hit patrons about 6pm on Sunday

A young boy, two men in their 30s and a woman in her 40s were killed at the scene.

A teenage girl was flown to the Alfred Hospital but died at 9.40pm.

Two children were also injured, including an 11-month-old boy at Ballarat Base Hospital who is in a stable condition.

Another boy, believed to be about six, is in the Royal Children’s Hospital also in a stable condition, after initially being listed as critical with broken legs and internal injuries.

Three adults remain in the Royal Melbourne Hospital, including a 35-year-old woman in intensive care in a serious condition.

Police are waiting on DNA results to confirm the identities of the victims.

Chief Commissioner Shane Patton said the crash was an “absolute tragedy” and commended first responders at the scene.

“But it comes at a cost as well,” he said.

“They will take that scene with them for many, many years – someone may never lose that scene, it may haunt them forever.”

Police are waiting to speak to the 66-year-old driver, who remains in hospital for shock and non-life-threatening injuries.

Patton said the driver was breath tested at the scene and did not show any alcohol in his system.

He is not known to police and does not have any prior offences apart from speeding tickets.

Crash reconstruction specialists are trying to piece together what happened.

Victoria Ambulance regional director Trevor Weston said emergency crews were confronted with a chaotic scene.

He commended the efforts of people who came to the aid of the injured until ambulance paramedics arrived.

“(Injuries were) quite traumatic for a number of those patients, particularly the four that were airlifted to hospital,” he said on Monday.

Daylesford was a close-knit community and some of the initial crews were from the area, he said.

“You never want to respond to any incident like this but certainly not in your home town,” Weston said.

“Any incident involving children is that next level of distress for our paramedics but the crews that responded last night did so professionally and provided the best care they could for all of those patients.”

Hepburn Shire Mayor Brian Hood said Daylesford would have been crowded on Sunday, with many people enjoying the warm evening over the unofficial Melbourne Cup long weekend.

“This will send shock waves through the community for some time,” he said.

-AAP