Tasmania Police have confirmed that a driver and co-driver were killed in a fatal crash on Cygnet's Wattle Grove Road in the state's South on Saturday.

Police have yet to release the names of the victims.

Acting Inspector Sally Cottrell said the crash happened about 11.40am.

RELATED: Targa driver dies in Lyell Highway crash

Targa Australia chief executive Mark Perry said it had been a devastating few days for the Targa family.

"We feel greatly for the family and friends who have lost those so precious to them."

Premier Peter Gutwein said it was a tragic outcome for all involved within the Targa community and his thoughts were with them during this difficult time.

"I would like to extend my deepest condolences to the family and friends of the three people tragically killed while taking part in the Targa Tasmania race," he said.

Targa confirmed the stages had been downgraded at 12.17pm to touring only and competitors returned to the finish at PW1 in Hobart.

Earlier, organisers confirmed in a statement that a serious single-vehicle crash had taken place just hours out from the finish line.

"Targa Tasmania confirms there has been a serious accident on the Cygnet Stage and Police have closed the road and are in attendance at the scene," the statement read.

"Further details will be released as available."

The iconic race endured a devastating day on Friday as 68-year-old New South Wales driver Shane Navin died in a crash on the Lyell Highway near Double Barrel Creek.

Earlier in the week, seven-time winners Jason and John White's Dodge Viper ACR Extreme crashed out on day two.