Chihuahua police have arrested two suspects for the killing of a family of eight who was stabbed to death in the northern Mexico border city of Ciudad Juarez.

Jorge Gonzalez Nicolas, general prosecutor for Chihuahua, said that authorities are also looking for a third suspect.

The motive behind the brutal killing is debt for dog fight gambling, according to authorities, although the exact amount of the debt is still unknown.

The two arrested, both employees for a textile factory, were identified as Jesus N. and Edgar N.

Gonzalez confirmed early suggestions that the family knew their killers - in fact they opened the door for them due to a "common friendship".

No signs of forced entry into the house have been found and the knife used for the murder was allegedly from the kitchen. The victims, who included two 4-year-olds (Abril Romero and Valeria Lara Castañeda) and a 6-year-old (Daniel Romero Castañeda), were found with tape over their mouths and their hands tied. The oldest, named as María del Carmen Morales Infante, was aged 60.

In total two men, three women and three children were slaughtered. A three-month-old girl in the house was found alive.

One of the victims, Maximo Martin Romero Sánchez - nicknamed Max - aged 27, sold used cars at his home and may have had cash with him at the time of the killing.

The eight were found on Sunday morning after they did not attend a Jehovah's Witness meeting and congregation members became concerned.

Ciudad Juarez, across the border from El Paso in Texas, was considered the world's most violent city due to a bloody war among drug cartels.

However, the murder rate has declined since President Enrique Pena Nieto was elected last December. According to federal statistics, homicides increased in 2010 to a peak of 3,900 and have dropped to 1,134 in the first nine months of this year.

Around 10,000 people have been killed in the city since 2006.

In September, a gang of gunmen killed 10 people, including a six-year-old girl, in the area.

Ciudad Juarez is also known as Mexico's "city of dogs" with a total of 200,000 stray dogs - German shepherds, Labradors and the poodle - roaming its streets.

Every month, around 700 dogs are found dead on city streets, killed by hunger, car tyres or execution.