First responders were also cited as saying conditions in the daycare were overcrowded, and one picture appeared to show an infant sleeping on a bathroom floor.
Israeli police said forensic experts were “conducting all necessary investigative measures to locate evidence and clarify the circumstances that led to the injuries of the infants”.
“Three caregivers who were at the daycare at the time of the incident were detained for questioning,” it added.
The private nursery was reportedly located in an apartment building in the predominantly ultra-Orthodox Jewish neighbourhood of Romema.
Paramedics, ambulances and fire trucks could be seen outside. Anxious parents gathered too as the news spread.
Zalmi Neufeld, a resident of Romema, told AFP news agency that he saw “emergency personnel pulling kids out of the building”.
“I saw parents crying, a lot of kids crying, kids all over the place,” he said. “It was like a war zone.”
The Magen David Adom ambulance service said it had received a report on Monday afternoon about two unconscious babies at a daycare centre.
Paramedics attempted to resuscitate the two babies and evacuated them along with 53 other babies and toddlers to hospitals for further medical examinations and treatment, it added.
The director of emergency medicine at Shaare Zedek Medical Centre said the three-month-old baby was “brought to us after undergoing advanced resuscitation efforts” but died. “At this stage, we still do not know exactly what the circumstances of the incident are,” Dr Gal Pachys stressed.
Education Minister Yoav Kisch said: “Helpless infants lost their lives in a private facility that operated without a licence and without oversight, in violation of the law.”
He added that he had instructed his ministry and other authorities to formulate a plan to shut down unlicensed daycare centres in the wake of the “tragic incident”.