A toxic fire that had been burning in Melbourne's south-east has been declared safe. 

On Sunday morning the Country Fire Authority issued a Watch and Act warning to residents of Dandenong South, Lynbrook, Hampton Park and Lyndhurst, advising people to take shelter indoors or avoid the area.

A State Control Centre spokeswoman said a small section of an industrial landfill site on Taylors Road in Dandenong South was reported smouldering at 9.15am Sunday. 

Firefighting crews wearing HAZMAT suits were able to smother the toxic blaze with dirt, bringing the fire under control, she said. 

The fire was declared safe at about 1.45pm. 

She said the fire was likely caused by a waste product of lead refining reacting with water.

She said hot weather, combined with recent rainfall, could have caused the reaction.  

“We believe there was plastic near the waste that caught fire as well,” she said. 

She said firefighters would monitor the site over the next 24 hours. 

No one was injured in the fire, she said. 

She said only a small area, about six metres by two metres, was burning.