Police remained on standby last night, ready to evacuate Waipori Falls residents as helicopters and ground crews battled an 80ha blaze in the area.
Fire and Emergency New Zealand shift manager Andrew Norris said a large area of mainly tussock and scrub caught fire near Waipori Falls Rd about 1.20pm.
The blaze was attended by eight helicopters with monsoon buckets and fire crews from Waihola, Outram and Dunedin, including a command unit from Dunedin.
The fire proved difficult to fight because the area was not easily accessed.
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Norris said about 75 per cent of the fire's perimeter had been contained but a large area was still burning out of control.
A police spokeswoman said no properties at the Waipori Falls village appeared to be under threat last night, but police officers were ready to evacuate residents if it became necessary.
The fire crews and helicopters continued to fight the fire until about 9pm before standing down.
A small team remained on site overnight to monitor the fire, and helicopters and fire crews would return this morning to continue fighting the blaze.
It was hoped a light rain forecast to fall overnight last night would help keep the fire at bay, Norris said.
"Every little bit will help," he said.