Thousands of Indian troops are fighting a huge fire emanating from a highly polluted lake that has caused panic among thousands of people in the southern city of Bangalore.

An army statement says nearly 5,000 soldiers swung into action on Friday as the fire threatened a military area with huge clouds of smoke billowing from the lake filled with sewage, chemical effluents and construction debris and choked with water hyacinth.

The army says the efforts prevented the fire from engulfing civilian areas of Banagalore, an information technology hub.

In 2015, a toxic froth spilled over to some of Bangalore's streets due to extreme levels of pollution in the Bellandur Lake.