A Canberra mother, who allegedly set her house on fire while she and her children were still inside, will undergo a mental health assessment.

Key points: The 47-year-old woman and her two children had to be resuscitated

The 47-year-old woman and her two children had to be resuscitated The mother and one of her children were placed in an induced coma to recover from smoke inhalation

The mother and one of her children were placed in an induced coma to recover from smoke inhalation She was this morning charged with arson with intent to endanger life

Firefighters rescued the woman and two primary school-aged children from the burning home in Canberra's south on Sunday morning.

They were all unconscious and required CPR before being taken to Sydney for specialist treatment.

The woman and one of the children had to be placed in induced comas to allow them to recover from smoke inhalation.

The 47-year-old woman was extradited back to Canberra yesterday and was this morning charged with arson with intent to endanger life.

She made a brief appearance in the ACT Magistrates Court today before being referred for a mental health assessment.

Neighbour told police he could hear children screaming

Documents tendered to the court revealed how a neighbour told police he could hear the two children crying and screaming inside as the fire took hold.

In his account to police, he said he and his wife could see the curtains on fire and that the front window was completely red.

He said he called out and bashed on other windows of the house, because the doors and gates were all locked.

The man said he could also hear the woman's voice but could not hear what she was saying.

Police said an investigation found ignition points on a couch and a linen cupboard.

Court documents also revealed allegations about an acrimonious relationship breakdown between the woman and the father of the children.

Police said the children's father told them about the details of a divorce settlement in which the woman had recently failed to pay a first instalment of $25,000.

Today in court prosecutors resisted calls for a psychiatric assessment, saying the woman could receive appropriate treatment in jail.

But Chief Magistrate Lorraine Walker disagreed and ordered an assessment be made.

It is not known when the case will be back in court.