The labourer in a "drunken" state quarrelled with his wife late last night and at around 2 am poured kerosene on her and their six-year-old daughter and allegedly set them ablaze resulting in their death, said police.
The labourer was working with a borewell drilling unit.
Bibinagar police station SHO D Suresh Kumar said the couple were married in March 2008 and had two daughters.
A year after their marriage the accused got addicted to alcohol and indulged in regular quarrelling with his wife, said SHO Kumar.
A murder case has been registered and further investigations are on.