The blaze threatens the communities of Bylands, Kilmore and Romsey, north of Melbourne, the Australian Broadcasting Corp. reported Monday.
No deaths or injuries have been reported but 12 have been destroyed, Victorian Fire Commissioner Craig Lapsley said.
He said 20 fires are burning, three of which are considered "significant." Firefighters were focusing their attention on the two largest at Kilmore and Morwell.
Residents in Kilmore were initially told to evacuate, but were later told to seek shelter indoors after it was deemed too late to escape a fast-moving grass fire, ABC said.