"She's devastated," says a source close to the 27-year-old actress.
Although their three-year relationship didn't last, Williams and Ledger could always agree that their daughter comes first.
"He was absolutely in love with his daughter," says another source. "And he really liked what he did [acting]. He spoiled [Matilda] rotten. He was playful and very funny with her."
The source adds: "I can't believe Matilda is going to grow up without a dad, without knowing her father. And that Michelle will have to deal with having a daughter who's lost her father. She's a survivor. She'll make it, but it's going to be hard. Her first concern is going to be Matilda."
• Reporting by JULIE JORDAN and ALEXIS CHIU
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