More than 175 firefighters are tackling a large chemical factory fire which is sending thick black smoke across Melbourne and may burn for days.

The Campbellfield fire was controlled just after midday, but authorities say it’s likely to be a “protracted incident”.

MFB chief officer Dan Stephens says the 50m by 50m premises is fully engulfed in flames and could collapse.

“We have not put firefighters inside the building because if we were to do that, I cannot at this point put in sufficient risk control measures to prevent the structure to collapse,” he said.

“We are not going to risk the lives of firefighters.”

Scores of firefighters are battling a blaze in Thornycroft Street in Campbellfield, which ignited about 6.40am on Friday. Photograph: Ellen Smith/AAP

The building is believed to contain dangerous goods, including flammable liquids, which have caused a number of explosions. Surrounding buildings have been damaged by heat and flames.

Stephens likened it to the toxic West Footscray fire last August, which took almost a day to control.

“This is likely to be a protracted incident that will be ongoing for a number of days,” he told reporters.

Nearby businesses were evacuated and authorities advised people in the Broadmeadows, Pascoe Vale and Coburg areas to stay indoors.

Boilermaker Alexander Powell, 28, who works next to the factory, heard the explosion through his earplugs.

“About a quarter to seven we heard a yell, we could see the roof on fire,” he said.

“There was a large fireball probably about 40 storeys high. I was wearing earplugs at the time, the noise was enormous, you could feel the heat bearing down on you, so we moved away.

“I was surprised the firefighters were so scared of it.”

The address is registered to Bradbury Industrial Services, a toxic waste disposal company that had its licence suspended by the environment regulator a fortnight ago for “storing more waste than permitted”.

Firefighters have advised residents in neighbouring suburbs to stay indoors. Photograph: Ellen Smith/AAP

During a March 13 inspection, EPA officers found it was storing more waste than its licence allowed. Storage containers were inadequately labelled and being handled outside an appropriate area.

Stuart Harper, who works next door to the factory, said the stockpile of chemicals had reduced.

Authorities have been aware of the site and put in measures which reduced the fire’s impact, Stephens said.

“This incident today has been of far less impact than it might have been, had that work not taken place,” he added.

Stephens says crews have put in measures to protect an LPG tank from the blaze.

The fire sent a large volume of black smoke towards the CBD and witnesses reported seeing plumes as far as Clayton and Coldstream.

People in the advisory area are urged to ensure all exterior doors, windows and vents are closed and heating and cooling systems are off.

About 30 workers self evacuated before crews arrived.

One man was taken to hospital for an eye injury.

The education department closed six local state schools as a precaution, while a further 12 schools advised their parents to collect their children if possible, as a precaution.

Premier Daniel Andrews said there were no suspicious circumstances surrounding the blaze.

“There’s been an accident, something has gone wrong in terms of moving certain containers from one part of the facility to another,” he said.

EPA chief environmental scientist Andrea Hinwood said Merlynston creek had been contaminated.