Smoke from a broken air-conditioning system has caused chaos at Sydney Airport, forcing the evacuation of the air traffic control tower and grounding flights for an hour.

Key points: Staff were cleared to return to the tower shortly after 12:30pm

Staff were cleared to return to the tower shortly after 12:30pm People on grounded flights told the ABC they could see fire trucks near the tower

People on grounded flights told the ABC they could see fire trucks near the tower The captain of a Virgin plane told passengers: "People are stuck in Melbourne, Brisbane, Adelaide, you name it."

Firefighters cleared about 15 staff to return to the tower at Australia's busiest airport about 12:30pm, about 80 minutes after they were evacuated when a fire alarm sounded.

Air Services Australia (ASA) — the national air navigation service provider — said smoke was detected in the building and all flights were grounded.

An ASA spokesperson said a failed bearing in an air-conditioning system produced smoke on the ground floor which set off the alarm.

About 15 people were evacuated from the tower while ASA firefighters discovered the problem.

Fire and Rescue NSW also attended the scene.

During the drama, 12 flights were diverted to other airports.

ASA said by 12:30pm, aircraft were being allowed to land, "albeit at a slower rate".

"Firefighters have cleared staff to return to the Tower," the organisation posted on Twitter.

Qantas is warning passengers of delays of up to two hours as they work through the backlog. ( ABC News: Jamie Toomey )

The captain on one Virgin Australia flight told passengers: "Every aircraft that was not in the air has been told to stay on the ground.

"People are stuck in Melbourne, Brisbane, Adelaide, you name it."



Qantas advised customers to check their flight status online.

"Thankfully, the disruption occurred at a quieter part of the day, however, there may be some delays for customers of up to two hours as all airlines work to get back to their normal schedules," a spokeswoman said in a statement.

'We can see fire trucks'

Earlier, one passenger on a flight bound for Los Angeles told the ABC he saw fire trucks from the window of his grounded plane.

"Virgin has decided to refuel to make use of the time and speed things up once we get going — people onboard are mainly bored and restless with kids crying and complaining," he said.

"My wife and others on the right side are watching the tower out the windows.

"We can see fire trucks from here but no smoke."

At one point passengers were told that all flights were grounded. ( ABC News: Jeremy Fernandez )

Another man on a flight bound for Bali said the pilot had told passengers "he had not heard from the control tower" and that no planes were taking off or landing.

Dean Bentick was on a Tiger flight when the crew announced a smoke alarm had gone off.

He said passengers were told all flights were grounded.

"Everyone was calm but annoyed, as we were emailed before our flight to say there are no refreshments on this flight to Coffs Harbour," he told the ABC.

"They have updated us three times saying 15 [minutes], then 15 then another 20."

Mr Bentick said passengers were free to move around the cabin during the wait.