The bushfire crisis in New South Wales has eased, but authorities warn that the situation remains dangerous and dynamic.

All emergency warnings have been downgraded, with watch-and-act alerts in place for fires around Lake Macquarie, the Blue Mountains and the Southern Highlands.

Rural Fire Service Commissioner Shane Fitzsimmons says the firefighting operation will continue into the evening before cooler weather tomorrow.

Meanwhile, an investigation by the RFS and police has revealed the state's biggest fire near Lithgow was caused by a live ordnance exercise in a Defence training area.

Defence issued a statement in which it said it continued to cooperate fully with state authorities investigating the fire, and that it was aware the RFS blames the Army.

Look back at how the day unfolded on our blog: