The World Health Organisation said on Saturday the boy died on Thursday from the H5N1 strain of avian flu, and that the girl had tested positive for the virus.
Both children were in Ho Chi Minh City and were the first confirmed cases of human bird flu in south Vietnam, which has had the country's most severe cases of flu in chickens.
The virus has killed four children and one adult in north Vietnam. Experts do not know why children have been the worst affected.
"This confirms our suspicions that H5N1 would be active in the south," said Robert Dietz, spokesman for the UN agency in Hanoi.
Dietz said the boy was admitted to hospital in Ho Chi Minh, Vietnam's largest city, on 11 January. The girl was admitted on 15 January. He said one WHO expert remained in Ho Chi Minh City and more were likely to be sent.
"There's no denying the disease is spreading"
Food and Agriculture Organisation
Ho Chi Minh City has banned the sale of all poultry in an attempt to stamp out the spread of the virus.
The city has also culled about 500,000 chickens of the estimated 3.2 million that have been slaughtered or killed by the virus in Vietnam.
The Southeast Asian country had more than 200 million poultry, but is not a major exporter.
Japan, South Korea, Taiwan, and more recently Thailand and Cambodia have all reported bird flu outbreaks. Two children in Thailand have tested positive for the virus, and tests are pending on several other people.
Vietnam's animal health department has said that bird flu has broken out in 24 provinces.
"There's no denying the disease is spreading," Anton Rychener, Vietnam representative for the Food and Agriculture Organisation, a UN body, told Reuters.
Thailand denies cover-up
Meanwhile, the Thai government denied on Saturday there had been a cover-up over an outbreak of bird flu, saying it had had suspicions for weeks, but had only known for certain when lab tests confirmed the disease.
After days of declaring the country free of bird flu, Thailand said on Friday that two boys, aged six and seven, had contracted the disease which the World Health Organisation says could set off an epidemic worse than SARS.
"The government never realised it was avian influenza before yesterday, but it was suspecting that it might be. That's why some measures in extraordinary degrees had been put in place," said the government's chief spokesman, Jakrapob Penkair.
"There has been a lot of talk that the government had tried to cover up bird flu. We had been trying to solve the problem, but we would not have spoken out before the lab tests came out. It
would have caused panic"
Thai prime minister
Critics have accused the Thai government of trying to hide the outbreak by blaming the deaths of tens of thousands of chickens since November on poultry cholera.
"The government's efforts to sweep the problem under the carpet has exploded in its face, leaving the poultry industry in tatters and the very safety of the public in jeopardy," the Bangkok Post newspaper said in an editorial on Saturday.
Impact on industry
The announcement that bird flu had struck threatened to devastate the Thai chicken industry, the world's fourth largest with exports worth $1.5 billion annually.
Prime Minister Thaksin Shinawatra, who says the bans will have a "trivial" impact on Thailand's exports, tried to play down the controversy over his government's handling of the crisis.
"There has been a lot of talk that the government had tried to cover up cases of the bird flu," Thaksin said in his weekly radio address on Saturday.
"We had been trying to solve the problem, but we would not have spoken out before the lab tests came out. Otherwise it
would have caused panic," he said.