TWO people have suffered serious burns in a houseboat fire at Lake Eildon.

The pair, both in their 50s, were flown by air ambulance to hospital with burns to their face, arms and neck, an Ambulance Victoria spokesman.

He said a woman was in a critical condition and a man was seriously ill.

The fire broke out just after 10am about 1km south-east of the Lake Eildon boat shed.

A Country Fire Authority spokeswoman said the cause of the fire was being investigated.

She said the blaze was isolated to the engine area of the boat.