The nine-year-old boy and 49-year-old man died at the scene at Wentworth Pass.
A 50-year-old woman and a 14-year-old boy were winched from the scene and taken to hospital with significant head and abdominal injuries following the landslip on the walking track.
They remained in a critical condition on Tuesday morning, NSW Ambulance Acting Chief Superintendent Stewart Clarke told Nine's Today program.
A fifth family member, a 15-year-old girl, was treated for shock after the incident, which was reported to emergency services about 1.40pm on Monday.
Paramedics walked the girl from the scene, which is about 90 minutes from the site's car park.
Police said the people were British nationals who were holidaying in Australia.
"Unfortunately there's been a landslip while they've been bushwalking," Detective Acting Superintendent John Nelson said.
"It's quite a tragic scene."
The 15-year-old girl was "extremely distressed", Det Supt Nelson said.
The "heartbreaking" incident happened in an "extremely dangerous, extremely unstable environment", Mr Clarke said.
"Both patients have significant head and abdominal injuries requiring sedation and intubation prior to them being extricated via winch," Mr Clarke said on Monday.
"It is terribly sad to have lost two lives here today and my heart goes out to the families and the survivors of this horrific ordeal who have witnessed what is certainly a traumatic event," Mr Clarke said.
He said the rescue operation was "complex and delicate", as crews worked to access patients in rugged bushland and on unstable ground.
NSW Police are working with the British consulate to contact relatives of the family.