It is suspected the children may have started the fire while playing with matches.
The woman ran into the bedroom and rescued the children, who were under a bed.
She and her children were taken by St John Ambulance to Wanganui Hospital, where they were admitted overnight for smoke inhalation.
Mr Rush said the bed was burning, and because it was under a window, the heat from the fire broke the window and the fire vented out through the hole.
Had the window not broken, the room would have filled with toxic smoke.
When two fire trucks arrived, the house was well alight and anything not burnt would have been seriously damaged by smoke.
"We cannot reinforce enough the importance of keeping matches and lighters away from children, and to install smoke alarms in sleeping areas and one in the hallway," Mr Rush said.
Investigations into the fire were continuing yesterday. The mother and her two children were staying with family in Wanganui.