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More than 30 residents evacuated from their homes near a large blaze at the old Waipukurau Hospital in central Hawke's Bay were this morning allowed to return home.

Emergency services were alerted to the fire about 1.30am, but firefighters had not yet been able to enter the building, which had been empty for about 10 years, because it contained asbestos.

At its height, the blaze was tackled by 17 fire crews and up to 83 emergency service workers, Fire logistics officer Glenn Drew said.

Residents of about 10 houses north of the fire were evacuated to a local hall early this morning due to the threat of contamination.

"The emergency department of the local council looked after them, and the Salvation Army got involved."

They were allowed to return home about 8.30am.

Firefighters from six engines were this morning dampening down hotspots and decontaminating the area, Mr Drew said.

"It's well under control now, there's just a bit of steam and smoke coming out now."

The cause of the fire was not yet known, he said.

"After they've really dampened it down and made sure it's safe, because there's a real potential for collapse, the fire investigation crews will be able to go in and do their work."

Part of the three-storey building had already collapsed.

Crews were being changed over this morning and volunteer firefighters had left the scene.