Two people killed in a Lake Macquarie house fire last week appear to be the state's first casualties from a lithium-ion battery-related blaze, Fire and Rescue NSW (FRNSW) says.

FRNSW investigators believe the fire, which began about 4:10am last Thursday, was related to a compromised lithium-ion battery that immediately went into "thermal runaway".

Thermal runaway is a process where a lithium-ion cell overheats and gives off toxic gases before exploding into flames.

Two of the occupants escaped the blaze but two others inside the townhouse at Teralba were killed.

Their bodies were recovered from the ruins on Friday and Saturday.

FRNSW acting assistant commissioner Terry Farley said fire investigators found remnants of the battery at the scene.

“FRNSW investigated the fire and we’ve determined that the lithium-ion battery was the cause of the fire,” he said. 

Commissioner Farley said these are the first deaths associated with the batteries.

“Sadly yes, unfortunately lithium-ion battery fires across the planet have increased in the past couple of years — we recently received information from the US about the increase in the number of lithium-ion batteries in their country," he said.

According to Fire Rescue NSW statistics, there have been 45 lithium-ion battery-related fires recorded in NSW so far this year.

There were 269 such fires recorded in 2023.

"This appears to be what we have been fearing for a while now, a person or persons dying due to a lithium-ion battery-related fire in this state," said FRNSW Commissioner Jeremy Fewtrell.

"We continue to warn the community about the potential for these batteries to explode in flames.

"Use extra caution when using lithium-ion batteries … when they go into 'thermal runaway', the danger is immediate."

NSW Police is working to formally identify the victims and prepare a report the state coroner.