A NSW police officer is in shock after being called to a fatal car crash and finding his two young daughters in the mangled wreckage.

Sergeant Steven Underhill's four-year-old daughter was killed in the collision, after the car being driven by her babysitter was torn in two. His two-year-old daughter was critically injured in the two-car crash, in northern NSW.

"He was speechless. He was so shocked and upset. He wanted to know what had happened," witness Tazman Currie told The Courier-Mail.

"One half of the car was on the right side of the road and the other half on the other side... The little [two-year-old] girl kept saying her back hurt, so I got her to sit down and tried to settle her down."