UPDATE: A FIRE that is threatening towns southwest of Melbourne is believed to have been deliberately lit.

Four aircraft have been dousing the blaze from the sky as the rocky terrain has made access by land difficult for the 33 crews on site.

The fire has consumed 250 hectares of grassland and residents are still on a watch and act alert for the time being. 

Police investigating the cause of the fire have confirmed they believe it was deliberately lit.

The CFA has released a 'Watch and Act' alert for Balliang East, Exford, Mount Cottrell, Parwan, Eynesbury, Mambourin, Quandong, Melton South, saying the blaze, which is travelling in a north-westerly direction, could affect them tonight.

CFA spokesman Gerard Scholten said they were concerned at the activity of the fire and had devoted large resources to bring it under control before it reached surrounding communities.

"It’s under the influence of some fairly reasonable south-easterly winds, so it is spotting 2-3km ahead, which is a concern," he said.

Thirty ground crews, plus the water plane, Elvis, and a helitanker have been sent to douse the blaze, which has already burnt 100ha of paddock land.

Smoke has affected the area, but the CFA ask residents not to call 000 unless they see flames, as many calls regarding smoke were tying up resources.

Read more on the Herald Sun