A Fire Service spokesman said the fire is now dampened down and the helicopters have left the scene. The ground crews will stay to monitor it.
Thomas Barnsley, 21, was on holiday at a bach in Taupo Bay when he saw the smoke around 6.30pm. He decided to video it as you "should probably document something like that".
"We initially thought it was somebody's tractor blowing up.
"When the smoke didn't start to go away we went outside. We saw really big flames and flashing lights at the southern end of the bay."
Barnsley said the fire was unexpected but they weren't concerned about it coming too close to their bach as the wind was blowing the blaze away from them.
A local woman staying at a campground said she could see the flames.
"There was an awful lot of smoke. The flames were going up the hill."
She thought the fire had been dampened down now.
"It's all well-contained and controlled now."