A murder inquiry was launched after a man walked into a police station and said there was a woman's body in a house.
Officers went to the house in Mold Crescent, Banbury, yesterday and discovered the body of a woman believed to be in her 20s.
Police immediately sealed off the scene.
The man, who police have not named, was arrested and was still being held last night.
The woman has not been identified, but neighbours in Mold Crescent said they were worried about the whereabouts of the woman who lived there.
They named her as mother-of-two Sughra Rani, believed to be 28.
She was not seen yesterday, and the neighbours said neither of her children had gone to school.
Her husband Mohammed Rahid, believed to be aged between 35 and 39, had not been seen either and Ms Rani's car was missing, neighbours confirmed.
Friend Washmaz Zia, of Grimsbury, Banbury, said: "Rani provides everything for her children.
"She is really friendly and takes good care of her children.
"She is here most of the time, we don't know where she is. We only saw her the other day. We are pretty close with them."
A group of neighbours and their children gathered near the house and said they were also worried about Ms Rani.
At the time police would only tell them a serious incident had taken place in the house.
None of them had heard anything nor saw the family on Tuesday.
Another tearful neighbour, who lived a few doors away from Ms Rani, said she was a "nice girl".
Thames Valley Police would only confirm a murder inquiry had been launched after a woman’s body was found at the property.
A spokesman said: "At about 11.30am, a man went into Banbury police station and informed staff that a woman’s body was at an address in Mold Crescent."
The police spokesman added: "The investigation is into the death of a woman. I can't confirm anything about children at this stage."
Yesterday the house was sealed with police tape and two officers were guarding the front and rear alleyway entrance to the terraced house.
A forensic team went into the house at about 1.30pm.
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