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Firefighters at a large blaze at the old Waipukurau Hospital in central Hawke's Bay suspect it may have been deliberately lit.

Emergency services were alerted to the fire about 1.30am, but early this afternoon firefighters were still unable to enter the building, which had been empty for about 10 years, because of fears parts of it could collapse.

At its height, the blaze was tackled by 17 fire crews and up to 83 emergency service workers, but only four crews were still on the scene this afternoon.

Firefighters arriving to the blaze this morning discovered the main three-storey building alight, and a smaller nearby building also alight, Fire Service eastern region assistant area manager Allan Bamber said.

"They were both burning at the same time, so we think that's suspicious ... we do suspect that it was deliberately lit."

The smaller fire was quickly extinguished, and police and fire safety officers were investigating.

Firefighters at the scene this afternoon were still dampening down hotspots and waiting on a demolition expert to assess how to tackle the interior, Mr Bamber said.

"The building's unstable. We're not sure about the integrity of the walls -- in fact some just fell in as we speak," Mr Bamber told NZPA from the scene.

"In one section the front and back walls have gone in, it's over about a 30 metre area."

The crews were a safe distance from the building and were awaiting machinery to knock down unstable walls and prise off the iron roof to enable access for an aerial appliance, Mr Bamber said.

It was initially thought the building contained asbestos, but fire safety officers later reassessed the risk of contamination.

"There isn't a great deal in there, if any. It's been removed," Mr Bamber said.

Earlier, residents of 10 houses north of the fire were evacuated to a local hall due to the threat of contamination, Fire Service logistics officer Glenn Drew said.

"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.