Paramedics responded to five 000 calls for people with respiratory issues overnight, and four people were hospitalised.
Many residents in Dallas evacuated their homes following a warning issued overnight.
“It is strongly recommended that you evacuate now if you are located in Dallas,” the Vic Emergency warning said.
“The air quality in the warning area is hazardous as a result of smoke from the fire located in Maffra Street.”
A separate watch and act warning, issued for residents in Broadmeadows, Campbellfield, Dallas, Fawkner, Glenroy, Jacana and Westmeadows, said:
“Anyone located in affected areas should take shelter indoors immediately. Close all exterior doors, windows and vents and ensure that heating and cooling systems are turned off.”
Residents who had not evacuated their homes were advised to ensure that all windows and doors are closed and turn off any heating and cooling systems.
Authorities also warned smoke would affect the suburbs of Brunswick, Brunswick West, Coburg, Coburg North, Essendon, Essendon Fields, Fawkner, Glenroy, Hadfield, Moonee Ponds, Oak Park, Pascoe Vale, Pascoe Vale South and Strathmore.
However, there was no threat to the public in those areas, Vic Emergency said.