Tara Nettleton, whose husband Khaled Sharrouf made headlines in 2014 when he posted an image on Twitter of his then seven-year-old son holding a severed head, died from appendicitis or a kidney condition, the Sydney Morning Herald and other media reported.
Sharrouf is widely believed to have been killed in a drone strike last year in Iraq, an attack in which fellow Australian jihadist Mohamed Elomar also perished.
The family's lawyer Charles Waterstreet told AFP the couple's five children, aged between five and 14, were trapped in an undisclosed part of Syria and in "grave danger".
The 14-year-old girl, named in Australian media as Zaynab, gave birth to a child two months ago fathered by Elomar and was also looking after her younger siblings, Waterstreet said.
"They are in grave danger. We've been in contact with them and there's bombs falling everywhere and people are starving in the streets," the Sydney-based lawyer said, adding the children told their grandmother Karen Nettleton they "want to get out" of Syria.
"Both their father and their mother are dead and they're victims stuck in a hellhole and they're Australians, and we should be doing everything we can to get them out."
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Media reports said Nettleton might have died last year, with her mother only informed in the last two weeks.
Immigration Minister Peter Dutton said he was not able to confirm her death, although all Australians were provided with consular assistance regardless of their circumstances.
But he warned the children's experiences since they were taken to Syria by their mother in 2014 to join their father, who left Australia in 2013, could influence the government's decision on whether they could return home.
"The conditions under which people are brought back into our country would have to be considered very carefully," he told Sydney radio station 2GB.
"Obviously any parent who is dangerous enough, crazy enough, to take young, impressionable children into that sort of an area obviously scars those children for life.
"So ultimately the government's clear objective is to keep the Australian public safe and we'd have to look at the individual circumstances to see what the kids may have been through, what they've been exposed to, whether or not later in life they pose a threat."
Up to 49 Australians have been killed in the conflict in Iraq and Syria, with an estimated 110 nationals currently fighting or working with militant groups, domestic spy chief Duncan Lewis told a parliamentary hearing this week.
Some 190 Australians were actively supporting IS back home through fundraising, and some also hoped to join such groups in the Middle East, Lewis added.