A home and three sheds have been destroyed by a bushfire south of Toodyay, about 85 kilometres north-east of Perth, but the alert level has since been downgraded.

The fire has been burning along both sides of Salt Valley Road, moving in an easterly direction.

DFES spokesman Russell Jones said a homestead was destroyed in the flames, but he did not believe it had been lived in for some time.

An emergency warning was issued on Tuesday afternoon, but by 7:40pm (AWST) the Department of Fire and Emergency Services (DFES) had downgraded the alert level for the blaze to a watch and act.

Firefighters were able to bring the blaze under control and consolidate containment lines as weather conditions improved.

However DFES warned there was still a possible threat to homes.

Water bombers have left the fire ground, but will return at first light on Wednesday if the situation changes.

Sorry, this video has expired Resident describes evacuating home as bushfire rages near Toodyay (Supplied: Ch7) ( Channel 7 News )

The speed of the fire front had dropped by 6:30pm.

"Conditions have eased off considerably, [the] wind's coming in probably at around 20 kilometres per hour," Mr Jones said.

"We're certainly hoping to have it contained and controlled by midnight, all going well."

Mr Jones said about 60 per cent of the fire's nearly six-kilometre perimeter had been contained.

At its peak, aerial water bombers and about 150 firefighters were fighting the blaze.

The fire was reported at 1:37pm and about 140 hectares had been burned by 6:30pm.

Power had been cut to some homes in the Shire of Toodyay.

The most affected areas were Toodyay, Hoddys Well and Morangup.

A watch-and-act alert was earlier issued for people in the area bounded by Clackline-Toodyay Road, Hoddy Well Road, Salt Valley Road, Chitty Road and Refractory Road in the Shire of Toodyay.

This was downgraded to an advice, with no immediate threat to people in the area.

A temporary welfare centre was set up at the Toodyay Town Hall for those who were outside the area.

Fire moved 'quickly, unexpectedly'

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Resident Meredie Smith, who was at the evacuation centre, said she was worried for friends after seeing how quickly the fire had travelled.

"Caught me quite unexpectedly, I looked out the window and we look out over the Avon Valley and just saw all this smoke billowing and I thought wow... it looked pretty deadly, it was really sort of moving quickly," she said.

"I raced outside, I thought oh God, the wind was really strong, really hot, and I knew then that something had obviously triggered it."

Ms Smith said the anniversary yesterday of fires that razed homes five years ago had been on the minds of residents.

In 2009, 38 homes were destroyed at Toodyay in a blaze declared a natural disaster.

Three firefighters and a local resident were injured in that blaze.

"After the bushfires five years ago, which happened yesterday, everybody's been talking about the anniversary and then all of a sudden, instead of coming behind us, it's in front," Ms Smith said.

"I just started thinking about everyday over there in Salt Valley Road, my plumber lives there, one of my work colleagues, and I just thought that's heading really fast and suddenly for the fire to be suddenly on them."

Total fire ban for region

A total fire ban was in place for Toodyay on Tuesday, with hot, dry weather conditions in the region.

The Bureau of Meteorology's duty forecaster Matt Boterhoven said a surface trough had caused very hot temperatures.

"Around Toodyay, we got up to around 43 degrees and some fresh and gusty north-westerly winds," he said.

"But they've now shifted into the west, south-westerly direction and the temperature's cooled off a bit, probably around 36 degrees."

Mr Boterhoven said wind speeds of about 20 to 25 kilometres per hour should ease off during the evening to around 10 kilometres per hour.

About 150 firefighters helped battle the Toodyay blaze. ( ABC News: Marcus Alborn )

Local councillor Paula Greenway earlier told the ABC she could see smoke from her house on the other side of town from the fire.

"I can see it in the distance along the hill line, there's a lot of black billowing smoke, and it's spreading around," she said.

She said residents would have been bracing for fire, with temperatures soaring into the 40s in the region.

"It's not just in Toodyay, Perth burns as much as country areas at this time of the year, especially on a day like today," she said.

"It's really, really hot and we have this mad wind blowing, it's just one of those days."

Resident Kate Pearce and her two children, aged one and three, were not home when the blaze began and were unable to return.

She said her husband was helping fight the fire, which was threatening a number of hobby farms in the area.

"It's wiping out bushland along that [Salt Valley] road," she said.

"There's lots of properties along that road, hobby farms up to 100 acres like ours, some smaller than that."