The Country Fire Service (CFS) says residential and industrial properties are believed to have been "impacted" by the fire near Port Lincoln on South Australia's Eyre Peninsula, where the blaze has taken hold in the local dump.
The scrub fire was earlier restricted to an area of about 113 hectares at the southern end of the peninsula, but is expected to continue to burn for several days.
Damage assessment teams are expected to gain a fuller picture of the extent of the destruction over the coming days.
It is currently unknown exactly how many properties have been lost — but the CFS has indicated homes are among them.
"It is estimated that both industrial and residential properties have been impacted," it said.
"Several properties were saved due to the diligent and timely response by all emergency service personnel."
An emergency warning for the fire, which broke out near Stamford Drive on Thursday afternoon, was later downgraded to an advice message.
But the CFS has said people in the area should stay alert and monitor local conditions.
Firefighting efforts will continue through the night, with crews from across the state to relieve crews currently on the fire ground.
More than 80 CFS firefighters, as well as Metropolitan Fire Service crews have battled the blaze throughout the day.
A significant amount of thick, potentially hazardous and toxic smoke is drifting across the area from the waste management facility south of Western Approach Road.
"Our biggest challenge overnight remains the dump fire," CFS deputy state controller Brenton Hastie told ABC Radio Adelaide's Peter Goers.
"We'll be unable to put it out any time soon.
"A large pit component of the dump has been impacted. It is quite a large fire. We're unable to confirm the built assets in the dump, as to what may have been lost."
The CFS said there were "unknown chemicals" at the site and urged the community to stay inside, limit movement around the area and close all windows and doors.
It has also recommended anyone suffering breathing difficulties should seek medical attention.
"With the weather conditions overnight, that smoke is likely to sit quite low to the ground and potentially spread over quite a vast area," Mr Hastie said.
"We're asking people to stay inside, keep their windows and doors closed, and avoid the smoke."
Mr Hastie said while the likelihood of any further asset losses had reduced, they could include various types of property.
"It's confusing amongst the smoke to see exactly what has been impacted," he said earlier in the day.
"There [are] a lot of buildings, structures, vehicles, fences, material on the ground through those industrial sites so I would imagine that there has been some level of loss."
Eight aircraft including water bombers were earlier called in to help battle the blaze.
"At this time there is no immediate threat to life and firefighters are still working to fully contain this fire," the CFS said.
"[But] residents in the area are to remain vigilant as this wind change may cause some sparks and embers to travel from the main fire area.
"If you are in this area stay alert, monitor local conditions and decide what you will do if the situation changes."
