A video posted on Facebook by a man on a boat off the coast of Mallacoota shows how the whole area is under a thick blanket of smoke and dark red skies.
Thousands of people, including tourists and locals, are trapped on a beach in East Gippsland as fires rage around them.
Mallacoota, 514km east of Melbourne, is being ravaged by the bushfires that is threatening people and homes.
The man says in the video he managed to escape with his family, including his pets, by getting on the boat and setting off away from land.
'It's f****ing chaos," he says. "I've never seen anything like it."
"I hope everyone is safe," he adds, in the video posted to Facebook.
About 4000 people are trapped on a beach in Mallacoota, with authorities warning them to get in the water.
Campers in Mallacoota were reportedly told to throw their gas cylinders into the water as the fire approached overnight, but locals say they can hear some exploding as a fire sweeps through the town.
Mark from Mallacoota told The Age he could hear "anywhere from 12 to 15 cylinders exploding" in the town.
Victoria's Emergency Management Commissioner Andrew Crisp has told reporters there was no evacuation order for Mallacoota — where 4000 people are trapped at the beach.
Other towns in Gippsland were evacuated on Sunday and Monday, but Crisp said there were fires to Mallacoota's west and northwest, making it unsafe for residents and tourists to leave.
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A blood-red image from Mallacoota shows residents waiting at the town's wharf, just moments before the fire was due to hit.
The image was taken at around 10.30am.