A devastating fire has raced through a centuries-old neighbourhood in Bangladesh's capital and killed at least 81 people, according to officials and witnesses.

Key points: About 50 other people were injured in the fire in the Chawkbazar area of Dhaka

About 50 other people were injured in the fire in the Chawkbazar area of Dhaka Firefighters had struggled to find adequate water supplies

Firefighters had struggled to find adequate water supplies Deadly fires common in Bangladesh due to lax regulations

About 50 other people were injured in the fire in the Chawkbazar area of Dhaka, which started on Wednesday and took 10 hours to bring under control.

The blaze started in one building and quickly spread in the district, which dates back 400 years to the Mughal era.

Mahfuz Riben, a control room official of the Fire Service and Civil Defence in Dhaka, said many of the victims had been trapped inside buildings.

"Our teams are working there, but many of the recovered bodies are beyond recognition," he said.

"Our people are using body bags to send them to the hospital morgue. This is a very difficult situation."

Another control room official, Russel Shikder, said 81 bodies had been recovered.

The fire hit an area containing gas cylinders and chemicals. ( AP )

Julfikar Rahman, a director of the Fire Service and Civil Defence, said firefighters struggled to find adequate water supplies and had to draw water from a nearby mosque to fight the blaze.

The condition of some of the injured people was "critical", said Samanta Lal Sen, head of a burn unit of the Dhaka Medical College Hospital.

He said at least nine of the critically injured people were being treated in his unit.

Chawkbazar is crammed with buildings separated by narrow alleys. The blaze spread quickly between the buildings, some of which house chemicals and plastic.

Most buildings are used both for residential and commercial purposes, despite warnings of the potential for high fatalities from fires after a blaze killed at least 123 people in 2010.

Authorities had promised to bring the buildings into line with regulations and remove chemical warehouses from the residential buildings.

Firefighters reported water shortages in the area where the fire started. ( AP )

Witnesses told local TV stations that many gas cylinders stored in the buildings continued to explode one after another. They said the fire also set off explosions in the fuel tanks of vehicles stuck in traffic in front of the buildings.

Building safety regulations are rarely followed in Bangladesh, and such accidents kill hundreds of people every year.

The Rana Plaza factory collapse in 2013 killed more than 1,100 workers and a fire in a garment factory in 2012 killed 112 people.

ABC/Wires