Residents have been warned to keep clear of a fire in Sydney’s inner west because the smoke may contain asbestos.

The large blaze started at a factory on Australia Street in Camperdown about 9.30am on Sunday morning and continued to burn for several hours, with 55 firefighters and 12 fire trucks responding to the scene.

Superintendent Norman Buckley from Fire and Rescue NSW said three people were inside the building but they evacuated on their own and were not injured.

The fire was contained to a single-level workshop and did not spread to neighbouring homes, but the building was significantly damaged with parts of the ceiling and the roof collapsing.