CFA firefighters were called to the scene at the Esplanade in Lakes Entrance, Gippsland, about 9am on Tuesday to investigate the leak.

Two primary school aged children, a baby boy and their parents were rushed to Bairnsdale hospital and are all in a stable condition.

Bairnsdale paramedic Mark Phillips one of the older boys raised the alarm when the baby became "quite limp".

"The boat had a problem with fumes after the engine was started," Mr Phillips said in a statement.

"The boys were all down below deck. The baby became limp and the level of consciousness dropped. One of the boys took the baby up to show mum.

"She realised how sick the young one was and looked at the other boys and realised they were having headaches and were in a bit of trouble as well so they acted really quickly and got the kids out of the boat."

Another boat took the family back to shore and the fresh air helped the children recover. "They were still suffering from headaches so there was obviously still a little bit of affect from the fumes on the boat but they were a lot better," Mr Phillips said.

Lakes Entrance Coast Guard helped firefighters to the boat, where they are investigating if carbon monoxide was the reason for the children falling ill.