Five-year-old Harry Haywood is being praised for his heroism after waking his sleeping family as fire spread through their Tahmoor home early on Thursday morning.
The kindergarten student woke up at around 2.30am to find smoke filling his bedroom.
He woke his mother Nicole Haywood, her partner Damon Cox and his two sisters, nine-year-old Brittany and seven-year-old Brie.
The family escaped from their home in Hilton Park Road just before the roof collapsed and the house was engulfed by flames.
Harry said he was woken by the smoke and admitted he had been very scared during the ordeal.
"I just got out of bed and I shut my eyes and ran to my sister's room," he said.
Ms Haywood was woken by Harry's screams.
"His first instinct was to wake everyone up... he just knew he had to protect us. We all owe our lives to Harry," she said.
Ms Haywood crawled on her hands and knees, feeling the walls until she reached the front door.
"The smoke in the lounge room was just so thick I couldn't breathe," she said.
"I heard each individual screaming 'mummy' outside and I knew they were out."
None of the family members was taken to hospital or required treatment at the scene.
Sergeant Barry Parrish from Camden Police praised Harry's actions, saying he had helped avert a possible tragedy.
He said he intended to recommend Harry for a bravery award, which would make him the youngest-ever recipient for such an award.
Media officer for the NSW Rural Fire Service Cameron Wade said the house collapsed soon after the family escaped.
"Those first on the scene described the premises as being fully engulfed in fire. There was an intense blaze in the front two rooms of the house," he said.
"Once a fire makes its way into the roof then it becomes very hard to control."
Mr Wade said the house had been fitted with smoke alarms but officials were unsure why they didn't go off and notify the family.
"There was definitely a smoke alarm in the house. We're currently looking into whether it was properly installed and functioning properly," he said.
"If you do have a smoke alarm it is important to get the batteries changed and checked regularly."
Mr Wade said local fire crews had responded promptly to the call for help.
"Fire crews were called at 2.41am this morning. The local volunteers from Tahmoor were on the site within eight minutes and were soon followed by members of the Thirlmere and Bargo RFS and members of the Picton Fire Brigade," Mr Wade said.
Mr Wade said investigations were continuing into the cause of the blaze.
"It is possible that we were dealing with a flashover where a small fire heats up a small space which then gets so hot it causes a large section of the house to spontaneously combust. That may have happened here, but we are still investigating," he said.
Mr Wade said the incident illustrated just how important it was for families to have smoke alarms installed and an escape plan in case of fire.
"When a house catches fire like this it gives off deadly toxic smoke. The smoke is given off because of the chemicals when things like furniture burn. It becomes vital to get down and leave immediately," he said.
"They certainly did the right thing in getting out of the house and staying out."