Martin Smith was jailed in the UK last year after sexually abusing his victim from when she was seven years old.
A Prison Service spokesman said the 46-year-old, who was serving a 16-year sentence, was found hanging by staff at HMP Manchester on Monday at about 6.30pm. Staff attempted to revive him but he was confirmed dead at 7pm.
The independent Prisons and Probation Ombudsman will be launching an investigation.
Smith's children Rebecca, five, and Daniel, 11 months, were found dead in a hotel on the Costa Brava in May 2010.
Their mother, Lianne Smith, 43, is awaiting trial in Spain accused of their murder.Lianne Smith is accused of killing her daughter Rebecca and son Daniel
Former Butlins entertainer Smith, who appeared as a guest psychic on Living TV's Most Haunted, was found guilty in December 2010 of rape, attempted rape, indecency with a child and indecent assault between May 1995 and May 2004.
Liverpool Crown Court heard at the time how he would attempt to hypnotise, hit and bully his young female victim, who is now in her 20s, to get her to comply.
Smith, originally from North Shields, had regular access to the victim.
The couple, who shared a surname but were not married, fled the UK in December 2007 after Smith was accused of sex attacks on the girl.
He was extradited back to the UK. Days later his partner was accused of smothering the children with a plastic bag.
No date has been set for Lianne Smith's trial in Spain.