The victim, aged in her 30s, was found by emergency workers about 3.20am on Monday, after the explosion levelled the two-storey property in the suburb of Whalan on Saturday afternoon.
It's speculated that a gas leak played a role in the deadly blast amid reports locals smelled gas in the area in recent weeks.
Five other people were hospitalised following to the explosion, which was felt across several suburbs in the city's west.
The body of the woman was found under the rubble of the blast by emergency workers in the pre-dawn. (Bianca De Marchi/AAP PHOTOS)
Blacktown Detective Superintendent Darren Newman said independent experts would attend the site to "get the best information available as to how this occurred".
"They'll go through a whole process and they'll work with our crime sene examiners to make sure that we can thoroughly investigate this," Supt Newman told reporters in Whalan.
The woman's body was located after a crane was used to move the property's concrete slab, dashing hopes she would be found alive.
Choking back tears, Supt Newman said the victim's mother was devastated by the loss and that police had been working with her since the collapse.
"Obviously we had to deliver a death message this morning," he said, describing the incident as difficult and confronting for emergency workers.
 "We just do the best we possibly can."
Authorities say they are investigating reports of a gas smell before the blast. (Bianca De Marchi/AAP PHOTOS)
The police investigation will be a part of a report for the coroner, who had been on site with emergency teams on Monday, authorities said.
While the cause of the explosion is unknown, NSW Deputy Premier Prue Car has said she is "deeply concerned" amid reports gas could be a factor.
NSW Fire and Rescue Commissioner Jeremy Fewtrell previously said there had been a leak at the site after the explosion, which hampered rescue efforts.
Dozens of search and rescue technicians, including firefighters who responded to last year's Turkey earthquake disaster, had been working at the scene.