The woman lit a fire underneath her bed at the Pacific Hotel Cairns in the northern city of Cairns early Sunday, according to police.
The fire scorched much of the 11th floor. More than 100 people were evacuated. There were no reports of serious injuries, police said.
Acting Chief Superintendent Chris Hodgman said the woman has been arrested and police are caring for her children, Reuters reported.
Police said the woman has been charged with one count of arson and willful damage. Her identity was not released.
Hodgman said the woman had been in quarantine for a couple of days and that there had been prior issues with her.
The woman is scheduled to appear in Cairns Magistrates Court Monday.
The incident came amid growing pushback from Australians against their government for the country’s COVID-19 policies.
The rise of the coronavirus omicron variant has also put the world on edge. The variant was first identified last week by researchers in South Africa, yet much about it still remains unknown.
The Associated Press contributed to this report.