Victorian Premier Daniel Andrews says at least 200 homes have been confirmed lost in the state's bushfires, but that number is expected to rise to 300 when assessment teams complete their work.

Key points: The full scale of destruction is still being calculated, as smoke and fires hinder access in affected areas

The full scale of destruction is still being calculated, as smoke and fires hinder access in affected areas Former police commissioner Ken Lay will lead a new recovery agency

Former police commissioner Ken Lay will lead a new recovery agency You can get the latest information from the Vic Emergency website or donate to the Victorian Bushfire Appeal

Police estimate 67,000 people fled the fires in East Gippsland and north-east Victoria, but all of those who were reported missing have now been found.

Mr Andrews told a press conference in Melbourne the Government would provide $50 million to set up a new agency, Bushfire Recovery Victoria, to be headed by former police commissioner Ken Lay.

He said the agency would be a permanent standing body to provide support across the state now and in the future, because the current crisis would not be the last.

Fires destroyed at least 24 homes in and around Buchan last Monday. ( Facebook: Buchan Caves Hotel )

Two people have been confirmed dead in the fires, which have burnt through more than 1.2 million hectares in the state's east and north-east.

For the first time in several days, no fires in Victoria are currently at emergency level, after two were downgraded on Monday morning.

But more than a dozen watch and act messages are still in place, and Emergency Management Commissioner Andrew Crisp said people needed to remain vigilant.

The state enjoyed milder conditions on Monday, but more dangerous fire weather is expected to return on Thursday.

Mr Crisp said the rain falling across fire-affected areas since Sunday was not making an impact on the fires, and had created hazardous conditions for fire crews.

On Sunday afternoon, a Forest Fire Management Victoria truck flipped on a slippery track. No-one was injured.

"The fact we've been able to pull back from the emergency warnings to watch and acts reflects the suppressed fire behaviour we're seeing at the moment," Mr Crisp said.

"I say suppressed because it's not gone away.

"It is there waiting for the next hot day, the next strong wind — whether that's the northerlies or the southerlies.

"We know these fires will become dynamic and dangerous again."

All blazes could merge into 'mega-fire'

Mr Crisp said there was "every chance" fires burning near Corryong could join with blazes burning in the High Country, East Gippsland and across the border in NSW to form a "megafire".

"It is mega in terms of area. Just because you've got a large area, it doesn't mean it's all fire: a lot of it is actually burnt out, so in some respects that's not such a bad thing.

"It doesn't mean you're going to see 1.5–2.2 million hectares of burning bush. That's not the case at all."

But he said the scale of such a fire would make it difficult for firefighters to extinguish it.

Cudgewa resident Joshua Collings lost everything in the fire in north-east Victoria. ( ABC News: Matthew Doran )

Emergency Services Minister Lisa Neville said while the rain falling across fire-affected areas was providing a sense of relief, she urged people to not become complacent.

"It is only January 6," she said.

"We have significant fires in the landscape.

"We've got other parts of the state drying out as we speak.

"So this is an opportunity for people to remain focused, listen to messages, listen to warnings.

"I know this is really hard and I know it's taking a massive toll on communities affected."

'This is the new normal'

Ms Neville said she had lifted an order which had given police the power to compel people to leave their homes, allowing people to return — but she warned similar orders were likely later in the week.

A state of disaster declaration remains in place until January 9.

"At this stage the Thursday, Friday do look like fire spike days," she said.

Authorities had hoped to fly about 300 people out of the fire-hit coastal town of Mallacoota on Monday, but smoke made this impossible.

The Australian Defence Force shared video online to show what its pilots had been up against.

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The Navy ship HMAS Choules, which in recent days transported about 1,000 people out of the area by sea, returned to Mallacoota on Monday to deliver supplies as well as heavy equipment that will be used to clear roads out of the town.

Crews are working to reopen sections of the Princes Highway and the Great Alpine Road, which have been closed for days due to the fires.

Across the state, 18 communities remain cut off, and relief efforts have not been able to get into two of these, Bendoc and Bonang in East Gippsland.

Mr Crisp said authorities had been in communication with the two communities and had been assured residents were safe, and the Defence Force would travel there as soon as possible.

Workers are clearing fallen trees and powerlines from roads, and repairing damaged bridges. ( Facebook: DELWP Gippsland )

Mr Andrews said more frequent and severe fires made a standing bushfire recovery agency necessary.

"As Ken said, this is the new normal," he said.

"We hope not to see this sort of unprecedented fire activity every year, but we're going to see more and more fires.

"And I think that probably means we're going to see more and more properties lost over time and we're going to be doing more and more rebuilding."

Mr Andrews said while the initial $50 million would start the agency's work, the recovery effort would cost "many hundreds of millions of dollars".

"It won't be $50 million, it won't be $500 million, it will be a lot more than that, but that's what we have to do."

Mr Lay said he would look to local people in affected areas for advice.

"What I've got absolute clarity about is that when issues happen in local communities, when disasters happen in local communities, the answers are generally in that community," he said.

"They're going to be absolutely critical to this organisation and how we do our job going forward."