Due to short circuit, the shanty of labourer Noor Alam caught fire in Greater Kailash area this afternoon, police said.
Two daughters of Alam, Reshma (5) and Nagma (2), were in the shanty when it caught fire.
Nagma died on the spot, whereas Reshma succumbed to the injuries in hospital, they said.
Fire tenders were rushed to the spot to douse the fire, police said adding, the bodies were taken for the post mortem.