I think "Dalek" was a little vague on it:
DOCTOR: They're never going to come! Your race is dead! You all burnt, all of you. Ten million ships on fire. The entire Dalek race wiped out in one second.
DALEK: You lie!
DOCTOR: I watched it happen. I made it happen.
DALEK: You destroyed us?
DOCTOR: I had no choice.
DALEK: And what of the Time Lords?
DOCTOR: Dead. They burnt with you. The end of the last great Time War. Everyone lost.
"They burnt with you" does imply that they were destroyed by the same act that destroyed the Daleks, but it could be interpreted to mean that the Time Lords won a Pyrrhic victory, that they were already doomed and, with the Doctor's help, managed to take the Daleks down with them. I think that's the way I interpreted it at the time. "The Parting of the Ways" reinforced this when the Doctor says "My people were destroyed, but they took the Daleks with them."
I think that may well have been RTD's intention at the time, with the bit about the Time Lords turning evil occurring to him later.