The woman, believed to be Mersane Warria - who's also known as Raina Thaiday, has not yet been charged and remains under police guard at Cairns Hospital.
Cairns Regional Crime Co-ordinator Detective Inspector Bruno Asnicar says the woman was arrested overnight and is currently assisting police with their inquiries.
"The 37-year-old mother of several of the children involved in this incident has been arrested for murder overnight and is currently under police guard at the Cairns Base Hospital,' he said this morning.
"The bodies have been removed from the residence, autopsies will occur today and it will be after that, we can comment on those sorts of things."
The mother remains in a stable condition at Cairns Hospital.
"She's awake, she's lucid and speaking," Detective Inspector Asnicar said today.
"At this stage we're not looking for anybody else.
"We're comfortable that the community at large is safe and have no need to concern."
Detective Inspector Asnicar was unable specify when charges will be laid but says more persons of interest may arise during the investigation.
He says forensic experts are trying to establish "exactly what happened in that house".
"They're looking for the order of the actions that occurred, they're looking for any trace evidence in the residence itself, they're looking for blood spatter patterns," he said.
A local is comforted by police. Photo / AAP
Detective Inspector Asnicar says the property was not previously known to police.
"This area does get calls for service but this particular house hasn't been flagged for particular calls of service, it's not a problem house," he said.
"This is just an ordinary neighbourhood. A lot of good people, a lot of kids in the area and this is just something that has caught everybody by surprise. It's absolutely tragic."
Detective Inspector Asnicar says so far police have found a number of weapons, specifically 'edged weapons, knives', at the property.
He was unable to comment on whether the woman's injuries were self-inflicted.
Acting Assistant Commissioner Paul Taylor says there's been a large community response to the deaths of the eight children, aged between 18 months to 14-years-old.
"Last night we saw a number of candlelight vigils around a number of churches in and around Cairns of different faith," he said.
Upon hearing the horrifying news, three relatives put their heads in their hands and wailed: "No, no, my babies, my babies."
They asked for the information to be repeated three times, unable to believe that the mother could be responsible.
"No way, no way could this ever happen... How could she do this? How is this happening to my family?"
The children were also with their cousin at the time of the accident. The child, a girl, often spent time with the family and lived nearby.
"Her parents are with family and with the children's dad. They are not okay. We can't sleep, we can't do anything."
A cousin, named Josh, told Daily Mail Australia that the mother wasn't religious.
"The rest of the extended family was religious, but she wasn't," he said.
"They wouldn't go to church every week or anything like that.
"But the rest of the family is religious which will be a big help. Knowing that there's something else."
The chilling sound of a woman pleading for forgiveness was heard coming from the home where eight children were found stabbed to death on Friday in Cairns.
A neighbour said they heard a woman screaming in a mixture of English and Torres Strait Creole, a native language of islanders.
The 20-year-old brother of most of the victims alerted authorities.
Another neighbour said she saw the mother taking personal possessions from her home to her front yard saying she was going to "make a fresh start", writes the Courier Mail.
A 13-year-old girl said she walked two of her girlfriends to the Murray Street house on Thursday evening after they had been shopping.
She said when they got to the house, the older girl's mother - Ms Warria - came out and gave her money for a taxi home.
"She was saying stuff about God and other stuff," she told AAP near the crime scene on Friday afternoon.
Ms Warria also told the girl she was a "warrior".
Cairns Regional Crime Co-ordinator Detective Inspector Bruno Asnicar described the massacre as a "tragic and traumatic event".
A relative has told of her horror after the bodies of eight children aged between 18 months and 14-years-old, were found dead at a Cairns home following a massacre just six days before Christmas.
Distraught locals grieve at the scene. Photo / AAP
Ms Warria's devastated cousin, Lisa Thaiday told reporters the woman was the children's mother. "I just can't believe it," she said. "Those poor babies."
Manoora, around 4km west of the coastal town's main tourist strip, is a suburb that historically has suffered a bad reputation and high crime rates. In June, media revealed the suburb was at the centre of a secret government report into youth sexual abuse and domestic violence.
Details about what investigators found inside the house have not been revealed but a neighbour said she had been told there were bloody scenes "everywhere" inside. Officers who arrived first on the scene said it was like "something out of a horror movie".
"It's a tragic and traumatic with so many deceased in one place. It's right up there with some of the most serious things I've ever had to deal with," Mr Asnicar said.
Ms Thaiday said another sibling, a 20-year-old man, arrived home to discover his brothers and sisters dead inside the house and alerted the authorities.
He is now being consoled by other family members.
"I'm going to see him now, he needs comforting," Ms Thaiday said. She described the family and extended relatives as close-knit and many live in surrounding suburbs.
"We're a big family and most of us are from the (Torres) Strait," she said, adding that she rushed to the scene after hearing about the incident on the radio.
Ms Warria was described as "happy go lucky and seemed to really love her kids", Daily Mail Australia has been told.
Robert Struber, who lived for 20 years in the house where the deaths took place, said he had spoken with the 34-year-old on several occasions while visiting his former neighbours.
He said the last time he had seen her, a few months ago, she was "friendly and happy to chat" and that she had mainly looked after her large family and "seemed to really love her kids".
Mr Struber said he hadn't met the father of the children.
He said the street had a mixture of Aboriginal families and people from the Torres Strait and Cook Islands. He moved out of the four bedroom house two years ago because it was too large, and said that following the tragedy he "never wanted to go back inside it".
ABC reported that a relative of the children, Larry Woosup, said the adults who lived in the house were his niece and nephew.
"I just heard about it. My family just rang because they're worried about our sister," he said.
"Some of them are my sister's kids. I just got a phone call from my son's mother from down in Mackay because they had seen the news flash down there.
"This is a close neighbourhood. I'm desperate like everyone else to hear [what happened]."
Neighbour Bessie Mareko said she saw the 34-year-old woman and a number of children at 2.00am on Friday morning cleaning up their home and putting unwanted items on the street.
Rebecca Levers who lives six doors down from the family on Murray Street, could not understand why this tragedy happened.
"They moved in about a year ago. They seemed really normal to me, I never heard of any trouble with them," she said.
"It's heartbreaking knowing there were kids involved, I think it's a big shock to the community.
"I've been here for seven years and it's the first time there's ever been a big crime like this."
Cairns City Church held a vigil for the victims of the tragedy, with Pastor Michael Dalla Vecchia calling on the people of Cairns to "stick together as a community".
The Bishop of Cairns James Foley also issued a statement about the tragedy.
"To say this has been a dreadful week is almost an obscene understatement: the Sydney siege; an 18 year old taken by a shark off Pt. Douglas; the Pakistan school massacre; and on Friday's 1pm radio news the headline that eight children had been stabbed at a Cairns suburb - Manoora. And all this in the week before Christmas," the statement said.
"Yet, as we saw in the aftermath of the Sydney siege, the very worst some people can do - may bring out the very best in so many more."
Police said it would be several hours before forensic officers would be able to complete their work inside the house - while detectives continued inquiries to establish what had led up to the slaughter.
Detectives rushed to the house in Murray Street at about 11.20am on Friday after they received reports a woman had suffered serious injuries.
The street has been branded a crime scene and the area has been locked down. Their home is a rented Housing Commission residence.
Seven News reporter Georgina McKerrow told Sky News a step-father was also believed to be living at the premises.
In a statement, Prime Minister Tony Abbott said: "This is an unspeakable crime... these are trying days for our country."
Queensland Premier Campbell Newman said he was "deeply saddened and shocked" by the events.
"Indeed, the whole Cairns community and the people of Queensland will feel the effects of this tragedy, particularly at a time of year when families come together," he said.
Shocked people have already turned to social media to express their disbelief at the second major tragedy to strike Australia in just a week.
Murray St is located in a community housing-dominated area. The Cairns Post has described the street in the past as "notorious" for crime and anti-social behaviour.
In July Murray Street was one of four identified by Cairns Regional Council as in need of permanent surveillance by CCTV cameras to ensure the safety of residents.
About 20 to 30 people, including neighbours and locals, could be seen to be visibly upset and comforting each other at the scene.
- additional reporting NZME
