The mother and children were recovered in La Conchita in the southern California county of Ventura.
The death toll rose to 10 with 12 still missing, said Ventura County Fire Department spokeswoman Mary Doregios.
Some 600 rescue workers were fighting against the clock, using mechanical diggers and fibre optic cameras to hunt for survivors from the mudslide that swept across the area Monday. Sniffer dogs were also in La Conchita, a 250-people town.
"We're still hoping to find those unaccounted for alive," said another fire department spokeswoman. Nine people have been dug out alive so far, but rescuers said hopes were fading of finding more.
Four men, three women and three children have been confirmed dead. Ten people were treated for injuries and two were listed in critical condition in hospital on Wednesday.
Fifteen homes were destroyed and 15 others damaged.
Twenty people have now died in two weeks of rain and snow storms that have now caused flooding in many western US states.
California governor Arnold Schwarzenegger visited the disaster scene and declared a state of emergency in Ventura County, paving the way for state and federal aid.
Schwarzenegger said he and his wife Maria Shriver "extend our deepest condolences to the families of those whose lives have been claimed by this tragedy and express the sadness we feel for residents of La Conchita and the other areas of our state that have been affected by these deadly storms."
County authorities urged residents in La Conchita and nearby areas to boil tap water or use bottled water for drinking and cooking.
Flash floods triggered by the storms and heavy snow have caused several other deaths in recent days.
"We have at least nine dead in Los Angeles County," said Lieutenant Ed Winter of the Los Angeles County Coroner's Department. One other death in Sacramento, the state capital, has also been blamed on the storms.
Houses have collapsed in flooded rivers and emergency services have staged several dramatic rescues in recent days. One eight week old boy was twice saved from a river in San Dimas after the inflatable rescue boat it was in flipped over.
There has also been flooding in Nevada and Utah.
Stuart Seto of the National Weather Service said the storms had broken several records in California.
The 15 days of consecutive rain seen up to Monday, which left a total of 16.9 inches (42.9 centimeters) of rain, beat an 80-year-old record.
The snowstorms left 200 motorists stranded in the San Bernardino Mountains over the weekend, while more than 18,000 residents of Los Angeles were left without power.