The bodies of the woman, identified as Prabhati (35), and her daughter, aged around 18 months, were recovered after the villagers spotted them, said Additional Superintendent of Police Madhababanand Sahu.
The husband of the deceased Subhendu Bhoi and another woman have been detained by the police for interrogation in connection with the incident, he said.
Prabhati was staying along with her daughter in the thatched structure located on the outskirt of the village while the rest of family lived in their house in the village.
Efforts are on to ascertain the circumstances under which the house caught fire and whether somebody set it on fire, they said.
Scientific team was also pressed into service as part of the investigation.