Police expect the death toll, already the worst since 75 people died in "Ash Wednesday" fires in 1983, could climb further as they search the ruins of wild fires that flared on Saturday and that continued to burn north of the city on Sunday.
The government put the army on standby and set up emergency relief funds, but also faced some pressure from Greens lawmakers who have been urging it to stiffen its climate-change policies to reduce the risk of more such summer disasters.
Thousands of firefighters battled for a second straight day on Sunday to contain the blazes, which witnesses said reached four storeys high, raced across the land like speeding trains and spewed hot embers as far as the horizon.
"It went through like a bullet," Darren Webb-Johnson, a resident of the small rural town of Kinglake, told Sky TV.
"The service station went, the take-away store across the road went, cylinders (exploded) left, right and centre, and 80 per cent of the town burnt down to the ground."
Police have said they fear more than 40 people may have been killed. Many of those confirmed dead were trapped in cars trying to flee one of the infernos. State broadcaster ABC showed pictures of a small town, Marysville, razed to the ground.
Firefighters say 640 homes have been destroyed in the fires across Victoria State so far this weekend, the vast majority in the worst-affected areas north of Melbourne.
Wildfires are a natural annual event in Australia, but this year a combination of scorching weather, drought and tinder-dry bush has created prime conditions for blazes to take hold -- and also raised pressure on the government's climate-change policy.
Greens leader Bob Brown, who has condemned the government's recently announced plan to curb greenhouse gas emissions as ineffectual, said summer fires would only worsen unless Australia and other nations showed more leadership on climate change.
"It's a sobering reminder of the need for this nation and the whole world to act and put at a priority our need to tackle climate change," Senator Brown said on Sunday.
The fires are around towns about 80 km (50 miles) north of Melbourne, hitting both semi-urban and rural areas. More than 20 people are being treated for serious burns, local officials said.
"These fires won't be out for some days," said a tearful John Brumby, premier of southern Victoria state, appealing for blood donors to assist medical teams aiding the burns victims.
"It's about as horrific as it could get," he added.
At the town of Wandong, about 50 km (30 miles) north of Melbourne, one survivor said he had found the body of a friend in the laundry of a burnt-out house. Another survivor, 65-year-old Rosaleen Dove, said she had fought successfully for seven hours with her husband to defend her home on Saturday.
"We made it! I never thought I could jump fences so quickly," she said.
All of the deaths, confirmed and suspected, are believed by police to have been suffered on Saturday. Police say 12 were killed around Kinglake, the worst-affected area so far known.
The main Victorian bushfire had burnt some 3,000 hectares of mainly national park on Saturday when temperatures soared close to 50 degrees Celcius (122 Fahrenheit). Within hours, the fire had burnt some 30,000 hectares after the wind changed direction.
Overall, fires were still burning across about 2,000 square km (770 sq miles) in areas north of Melbourne in Sunday, with a few towns still under threat, the ABC said on its Website.
Australian Prime Minister Kevin Rudd, visiting the burnt-pout region, said there had been an appalling loss of life. "Hell and its fury have visited the good people of Victoria," he said.