The child was one of three people travelling in a silver hatchback that left the road on a bend on Scenic Drive, ploughed through a fence and hit a tree.

The accident happened about 2.45pm yesterday.

The driver, understood to be the child's 39-year-old mother, was taken to John Hunter Hospital with a head injury and multiple abrasions, a NSW Ambulance Spokesman said.

The woman was conscious at the scene but appeared to be suffering from amnesia, the spokesman said.

A 16-month-old girl was also taken to hospital in a stable condition.

The three-year-old girl, a passenger in the back seat, suffered multiple injuries, including serious head injuries.

She was rushed to hospital in a critical condition and died a short time later, the ambulance spokesman said.

Newcastle city duty officer Inspector Murray Lundberg said the three were understood to be from the Newcastle area.

Scenic Drive was closed until late last night while crash investigators examined the scene.

Specialist police arrived from Sydney yesterday evening to carry out photogrammetry at the site of the crash, which occurred out the front of Merewether Heights Public School.

Photogrammetry is a technology used at crash scenes and involves the use of specialist equipment to determine geometric properties from photographs.

The Hunter Crash Investigation unit was continuing its investigations and would prepare a report for the coroner, Inspector Lundberg said.

In a separate accident, the Pacific Highway at Charlestown was closed for a short time after a crash about 5.45pm.

One person was taken by ambulance to John Hunter Hospital.