Toxic black smoke is billowing across parts of west Melbourne as firefighters battle a massive factory fire.
The fire in West Footscray began early this morning and more than 80 firefighters were fighting the blaze.
Residents said they were hearing loud explosions.
The Metropolitan Fire Brigade (MFB) said 30 trucks and cherry picker aerial appliances were being used at the scene.
MFB acting deputy chief officer Ken Brown said the storage factory acontained acetone and a welding chemical, and explosions posed a risk to firefighters when they arrived.
"We had some 44-gallon drums explode and fly through the air."
The fire brigade warned residents there was toxic smoke within a 2km radius of the factory, and issued a Watch and Act message urging everyone within a 500m radius to take shelter indoors immediately.
They have been told to keep doors and windows closed and switch off heating and cooling systems to prevent smoke getting into the house.
Parents at nearby schools were told to consider keeping children at home.
Yarraville resident Cassie Smith-Moir, who has worked as a firefighter, said she could see the smoke outside her home when she went outside about 5.30am.
"There was really thick black smoke - from the street you could see periodically there's been flames shooting up, and aside from the constant fireworks sound there's an occasional larger explosion," she said.
"I mean, there's smoke going for kilometres and the sky is really black from the smoke. Everyone will see when they wake up."
A caller to ABC Radio Melbourne, Ian, said he could see the smoke from Geelong.
"You can see the smoke and flames coming up over, building up to the height and then just plateauing out and filling into the clouds."
Mr Brown said a containment strategy to prevent the fire from spreading to neighbouring factories was working, and foams were being used to extinguish the blaze.
He said the building contained asbestos and crews were trying to reduce the risk of fibres spreading into the air. "Wetting the material actually minimises the exposure," Mr Brown said. "As we clean up, the focus will be on making sure the asbestos is removed."
Mr Brown said firefighters would monitor particulates in the air to assess the risk to people nearby.