A Peter Jackson Hobbit fantasy involving fire-breathing dragons got a bit too real on a Wellington film set last night.

A generator truck which caught fire on the site, near the old Mt Crawford prison, sent clouds of smoke billowing and engulfed a crane used to light the set.

The set, recently built in a patch of bush above Shelly Bay, was understood to represent Dale, the town of men under Lonely Mountain, which gets scorched by Smaug the dragon.

The buildings were made to look as though they had been gutted by fire, but the fire service said it definitely wasn't theatrical smoke. It took about 20 minutes to put the fire out.

Ed Scragg, who saw the fire from a Roseneath home on the other side of Evans Bay, said clouds of smoke billowed around the lighting tower just before 5pm.

Sir Peter Jackson's spokesman, Matt Dravitzki, confirmed filming continued after the fire was put out.

The set was built earlier this month for a few days' filming as part of 10 weeks of final-cut shooting for the last two instalments of the Hobbit trilogy. It was the last day of filming before a return to the studio tomorrow.

Dravitzki was not prepared to say what part of the Hobbit story they were working on, although he joked, "I was planning to tell you that the dragon Smaug set fire to the set."

The next Hobbit instalment, The Desolation of Smaug, is due in cinemas in December.

Meanwhile, Hobbit star Sir Ian McKellen visited an old friend in Christchurch during a brief trip to the city yesterday. As well as stopping in at the rebuilt Isaac Theatre Royal, of which he is an avid supporter, he met English actor and mate Michael Elsworth, who now lives in Christchurch.

"We worked together as amateur actors in Lancashire," said McKellen. Elsworth was also his double in The Lord of the Rings trilogy.