A Perth father who doused two of his children with petrol and set one alight had been drinking and smoking cannabis on the day of the offences, the WA Supreme Court has heard.

Edward John Herbert has pleaded not guilty, on account of an unsound mind, to five charges including attempting to kill his two daughters at the family's home in Doubleview in August 2015.

The children were aged seven and three at the time, with the younger girl suffering burns to her upper body and face.

On the first day of Herbert's judge-alone trial Justice Lindy Jenkins heard the child had suffered "severe and life-threatening" burns and would be permanently scarred.

Herbert's cannabis use had 'doubled'

Prosecutor Amanda Forrester told the court Herbert was a regular cannabis user and drinker.

His partner tendered a statement to the court which said Herbert had been "getting angry all the time" and had "doubled his cannabis use" in the lead up to the incident.

She said he had smoked cannabis throughout the day in question and consumed alcohol before he began to get angry that evening.

She tried to keep him calm as his anger escalated and feared for her life.

The woman said at one point she heard Herbert say "the werewolf is coming at 12:00pm".

Nearing midnight he said "that's it bitch, I am going to kill you", before he went to get a jerry can of petrol and entered his daughters' room.

He then poured petrol over the younger child and set her alight, before he began to douse the older child in petrol.

Neighbour smothered fire with blanket

Off-duty police officer Stephanie Bochorsky was at home when she heard the altercation and screaming from her neighbours.

The officer told the court that she ran over and asked the woman if she was OK.

"No, he's setting the kids on fire," was the reply.

Holding back tears, Ms Bochorsky said she ran into the room and found the three-year-old on fire.

She covered the child with a blanket to extinguish the fire and pulled both children from the room.

A third child was removed from the home by another woman before another neighbour entered and found Herbert pacing back and forth.

Daniel McMillan told the court he asked Herbert what he had done, and he replied that his daughter was "too beautiful", and also said "don't worry, I wouldn't have lit my boy up".

Mr McMillan said Herbert told him "they were his kids" and he could do whatever he wanted.

He also testified that Herbert had threatened him, but he was able to disarm him.

The trial continues.