A woman has been charged over the alleged murder of a four-year-old boy and his grandmother, in what police have described as a "horrific" incident at a house in Melbourne's west.

Police found a 60-year-old woman stabbed to death in the backyard of the home on Varsity Court in Albanvale and found her 61-year-old husband bound and gagged in the lounge.

When police freed the man he asked about his grandson, who police found dead in a bedroom with stab wounds.

A 45-year-old Albion woman has been charged with two counts of murder, intentionally causing injury and false imprisonment.

Detective Senior Sergeant Stuart Bailey earlier said police were investigating the relationship between the 45-year-old woman, who was being questioned, and the man found gagged.

"But the actual motive is yet to be established," he said.

Senior Sergeant Bailey said officers were looking at the possibility the two were involved in a romantic relationship.

"They've known each other for three years and the nature of their relationship is currently unknown," he said.

Police said the grandparents looked after the boy every Tuesday while the parents, who have three more children, went to work.

Police said the motive for the double stabbing at Albanvale had not been established. ( ABC News )

Senior Sergeant Bailey described the scene as horrific and said the child's parents were distraught.

"It's an extremely distressing situation for the police as well, so police welfare services have also been contacted for the welfare of our police members," he said.

"As you'd understand the members who uncovered this are quite distressed."

The 61-year-old man is being treated in the Royal Melbourne Hospital for minor injuries.

Neighbour Eddie Portelli said he did not know the family.

He said the first he knew of the attack was when police started arriving at the house.

"I never heard any screams or nothing," he said.

Mr Portelli said he saw a woman being escorted from the house.

"[Police] grabbed her, they put her in the van and took her away," he said.

Another local, Mary Galea, said she was sickened by what had happened at the house.

"I'm just worried, because I have grandchildren here too. It's scary," she said.