An emergency warning has been issued for the blaze which is burning uncontrolled in scorching conditions.
People in the town's southwest, including Stamford Drive, Pine Freezers Road and smaller surrounding roads, have been told it is too late to leave.Â
They have been urged to stay indoors because of radiant heat.
The Country Fire Service said fire crews were actively working to contain the blaze and were being supported by water bombing and observational aircraft.
Police and ambulance crews were also on the scene.
Video of the fire posted to social media showed water bombing aircraft flying near houses and thick ash clouds over the area.
The emergency warning said conditions were continually changing and residents had been urged not to leave the area by car or on foot because the roads, including some that were now closed, were not safe.
The warning said firefighters were unable to prevent the blaze from spreading and people could lose power, water and phone connections.
By 3pm, the mercury had reached 39.1C in Port Lincoln but a cooler change was moving in from the west.
A high of 24C was forecast for Friday.
9°C