A warning issued just after 9 p.m. local time -- that the fire could affect the alpine area of Hotham Heights -- was downgraded shortly afterward to a watch-and-act alert, the Australian Broadcasting Corp. reported.
The fire, which has consumed more than 27,000 acres, was expected to cross a creek and burn uphill to the ski village on Mount Hotham, said incident controller Stephen Grant.
Grant said three teams were in the village preparing should the fire approach.
Fire officials said it was too late for residents of the area to leave, and cautioned those already out of their homes not to return.
2014: The Year in Music [PHOTOS]