FIREFIGHTERS are making inroads in bringing a large bushfire in Victoria's southeast under control thanks to cooler weather overnight. 

The cooler conditions prompted authorities to downgrade the emergency warnings for a number of small towns in East Gippsland to a "watch and act" status.

The 7500 hectare fire had been burning out of control throughout yesterday evening but about midnight the Country Fire Authority (CFA) said it was being controlled.

The bushfire was burning in the Tostaree-Princes Highway area, east of Nowa Nowa near Orbost, and travelling in an east north-easterly direction.

A spokeswoman from the incident control centre in Bairnsdale said spot fires had diminished and there weren't expected to be any flare-ups overnight.

About 150 firefighters were expected to continue battling the fire overnight.

"By early morning the plan is that we can talk about it being controlled," the spokeswoman said.

Emergency warnings were downgraded to watch and act alerts for the towns of Jarrahmond, Newmerella, Waygara, Bete Bolong North, Corringle, Simpsons Creek, Wombat Creek, Bete Bolong and Tostaree.

Those towns were no longer under direct threat from the fire but the ICC spokeswoman said residents needed to remain vigilant in case conditions changed overnight.

The fire destroyed two homes, a machinery shed and a hay shed in the Wombat Creek area, east of Lakes Entrance, the state control centre said.

The CFA said the Princes Highway was expected to remain closed for an extended period between Nowa Nowa and Orbost.

After a 40 degree scorcher in Melbourne and other parts of the state yesterday, the forecast was for a cooler 29 degrees in the metropolitan area today.