Rain and low cloud have helped suppress the fire burning in the Deep Stream area in Otago, which is now contained.
Fire and Emergency Incident Commander Graeme Still said conditions had prevented a full aerial reconnaissance this morning but 10mm of rain has fallen so far.
"We have been able to see that there are still some hotspots smouldering but there is no active fire front as there was yesterday. When we are able to get access, we will send in ground crews to tackle these hotspots."
The fire near Middlemarch had been burning in a remote area of tussock and scrub, with no road access. It had covered 2773ha by 6pm last night. Still said the fire had spread overnight but the area had not been completely mapped this morning.
The fire is close to the Deep Stream reservoir, Dunedin's main water source. The city's residents were yesterday being asked to save water after the council shut off the main water supply due to fire retardants getting in the water.
The fire began near the Te Papanui Conservation Park yesterday morning and spread to adjoining land owned by the Dunedin City Council, and also into the Clutha District. Fire and Emergency is bringing in a fire investigator to establish the cause.
Still said that the temperature inversion layer could still be trapping smoke in some areas so anyone who is sensitive to smoke should stay inside with windows and doors shut. Smoke from the fire affected a large area of South Otago yesterday.