Tiny Lucy James had been left orphaned after her parents, Leah James and Justin Schollbach, were killed as they were driving back from visiting her in hospital. Their car crashed into a power pole and split in two, killing the couple instantly last Tuesday.
Lucy was born 12 weeks early weighing less than 3lb, and was being cared for in the neonatal ward at the Royal Hospital for Women in Sydney.
The tragic story has moved the whole of Australia.
Family friend India Brent said Lucy's death had been very hard to take. 'She passed away this morning, wanting to be with her mum and dad I think,' she told the Herald Sun.
Lucy was Justin's first child, while mum Leah had five other children from a previous relationship. Lucy's half-brothers and half-sister Dylan, Rebecca, Michael, Stephen and Troy had penned letters to read out for their mum at the funeral.
A statement from the hospital said Lucy had died of complications associated with her premature birth.
Clinical director Dr George Bearham said: 'This is a very sad time for Lucy's family and all of those who cared for her here.'
Andrew Loxton, the father of Ms James' older children, said he would start a foundation in memory of Lucy.