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The collision killed members of two families from Melbourne's Indian community on Sunday evening in Daylesford. Illustrative image. Image Credit: IANS

Sydney: A driver whose car crashed into a pub in Australia killing five people, including two children, is an insulin-dependent diabetic who remains "deeply distressed" by the incident, his lawyer said Wednesday.

The collision - described by police as "horrendous" - killed members of two families from Melbourne's Indian community on Sunday evening in Daylesford, a rural town northwest of the Victorian state capital.

The 66-year-old driver, who has not been named, was interviewed by police but not charged, his lawyer Martin Amad said in a statement provided to AFP.

"He is deeply distressed and feels great empathy with the families and friends of the victims and the Daylesford community," Amad said.

"He is an insulin dependent diabetic and required immediate treatment at the scene by paramedics. He remains in hospital," the lawyer added, describing the driver as a "family man" with no criminal history.

It was not clear if the man's insulin dependency had any bearing on the crash.

The driver returned a negative alcohol reading when tested, police say.

The crash killed a 38-year-old man and his 11-year-old son as well as a 30-year-old man and his 44-year-old female partner, whose nine-year-old daughter later died in hospital.

Five others were injured, three of whom remain in hospital.

Police said this week that "all lines of enquiry are open".