Emergency crews rushed three adults and a child to hospital after the family was overcome by carbon monoxide fumes in their Wentworthville home about 4.15am on Saturday.
The family had brought a charcoal barbecue from their balcony indoors to stay warm.
However, the poisonous fumes built up inside the unit and left three of the occupants unconscious.
Fire crews had to move the family on to the balcony to treat them as carbon monoxide levels inside the unit were more than four times the dangerous limit.
Carbon monoxide is a colourless, tasteless and odourless gas that can overwhelm and cause death, without the casualties being aware of its impacts, the New South Wales fire service said.
"There's nowhere for the poisonous fumes to go if they build up indoors," fire service Commissioner Jeremy Fewtrell said.
"Using charcoal bead cookers, barbecues and outdoor heaters inside creates an extreme risk to you and your family."
Fire and Rescue NSW's Paul Collis said people were using alternative heaters designed for outdoor use in indoor settings as it gets colder and more expensive to heat homes.
"It doesn't seem dangerous, but you go off to sleep and the carbon monoxide is produced and it puts you into a deeper sleep," Mr Collis told ABC News.
Fire crews ventilated the apartment and checked the gas levels throughout the block.
