The family were camping in Nanga Brook's Lane Poole Reserve, near Dwellingup in WA, when the tragedy occurred.
The trio were sleeping when the tree fell, which smashed into pieces upon the impact.
“[We heard] a real loud crack, we actually thought it could have been a gunshot or a gas bottle exploding,” nearby camper Craig Kennewell said.
Other campers heard their screams, rushing to their aid.
All three were rushed to hospital, while the man and the woman have since been discharged.
The baby is still under observation at Perth Children’s Hospital and is said to be in a serious but stable condition.
“All three are lucky to get out alive, I think,” Mr Kennewell said.
It's been reported that sadly one of the family’s pet dogs couldn’t be saved.