A lit cigarette left unattended in a bed was most likely responsible for a hostel fire in Sydney's inner-west which left two people injured, police have said.

Four people were rescued from the three-storey smoke-logged boarding hostel on Parramatta Road at Concord after the blaze broke out on the ground floor about 5:45pm (AEST) on Wednesday.

Inspector Michael Penfold said two people suffered burns and smoke inhalation.

"Twenty eight rooms were evacuated and all the residents were accounted for however two people did suffer minor injuries," he said.

"One suffered minor burns to his hands whilst the other suffered second hand smoke inhalation.

"The fire was extinguished and the people that were injured were conveyed to Concord Hospital."

Police set up a crime scene overnight at the hostel and detectives from Burwood Police Station have been investigating the cause of the fire.

"It appears that an unattended cigarette caught fire in a bed," Inspector Penfold said.

"We will be following up a number of lines of enquiries."

Emergency housing was arranged overnight for the boarders.