Police are hunting an elderly man after a vicious home ax attack in an Australian town that seriously wounded a female police officer and left her mother and two young children dead.

Police are seeking to question John Walsh, the father of wounded Senior Constable Shelly Walsh, The Daily Telegraph reported.

Shelly Walsh is in a serious but stable condition for at Orange Base Hospital. Her two children, a 7-year-old boy and 5-year-old girl, and her mother, Mabel, were killed in the attack inside her home at Cowra.

It is feared John Walsh, in his late 70s, is heading to the Newcastle area and may commit more violence.

A neighbor has told how Shelly Walsh ran to his house bleeding and screaming for help.

“Apparently she came in screaming that her father’s gone off and axed the kids,” Terry Lovett said.

Lovett, who is in Canberra, spoke to his wife by phone shortly after the tragedy unfolded mid-afternoon today.

He said said his wife, Cheryl, helped Shelly Walsh, who had a cut across her face.

It is believed that the eldest child of the injured officer, a 9-year-old, was at school at the time of the attack and checks are being made on this child's welfare.

Police have informed the father of the children, also believed to be a police officer, that they have been killed and are now protecting him with the belief John Walsh is on his way to harm him.

John Walsh allegedly threatened to kill the estranged husband, police said.

Click here to read more on this story from News.com.au.