Hundreds of travellers were forced to leave Sydney Airport's international terminal after a fire - sparked by a damaged lithium battery in a passenger's backpack - filled an area with smoke.

Travellers were evacuated about 2.15pm on Wednesday as aviation firefighters were called in to extinguish the small blaze, in the duty-free area.

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Processing was stopped and passengers evacuated as the fire broke out, just outside the security screening area, a Sydney Airport spokesman said.

However, had the smouldering battery made it onto a flight, crew would have been well-equipped to deal with it.

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A spokesman for the Civil Aviation Safety Authority told 7NEWS.com.au specific rules require batteries to be in carry-on luggage.

The purpose being that if a battery is damaged in the overhead compartment, cabin crew will see the smoke and act quickly.

Planes are equipped with fire extinguishers and heavy-duty tongs, which can extract the battery for it to be soaked in water.

Tara Moroney, a producer for radio 2GB, was due to catch a flight on Wednesday when she saw security officers cut tape off the battery with a pair of scissors, severing a wire and causing the spark.

Flight warning

A warning on the Civil Aviation Safety Authority's website reads: "Damaged batteries can be dangerous.

"Whether they’re dropped, smashed, overheated or mistreated in other ways, lithium batteries can become unstable and have been known to ignite fires due to mistreatment."

Delays expected

Processing in the airport has resumed and Customs is working to move through a backlog of passengers.

Travellers are urged to check with their airlines if they're concerned about delays.

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