A fire that broke out at a Melbourne recycling plant on Thursday (13 July) has shrouded a suburb in toxic smoke, forcing residents to evacuate.

Four people have been taken to hospital and a further eight are treated for asthma symptoms since the fire began.

Authorities have told people living near the Coolaroo SKM Recycling factory to evacuate. An emergency relief centre has also been set up.

More than 115 homes are affected by the evacuation order. People are being advised to collect their medicines, pets and belongings and securely lock their houses before leaving.

The blaze broke out on Thursday morning after fire fighters extinguished a small blaze at the site on Wednesday night.

Emergency services issued an evacuation warning for the suburb of Dallas at 8.30pm local time (11:30am BST) on Thursday night, with poor air quality levels being detected by the Environment Protection Authority.

The authorities have described it as "the size of a sports field" and have said that the fire is likely to burn for at least two more days.

"We're saying it could go up to three days to put the fire out completely," MFB deputy chief officer Ken Brown told 3AW.

The blaze is being fuelled by tonnes of plastic, cardboard and paper, Metropolitan Fire Brigade Commander Brendan Angwin told Australian Broadcasting Corp.

"It is extremely difficult to gain access to the fire. We are really concerned for fire fighter safety." Angwin said.

Brown said that it was the fourth time the plant has caught fire this year, with other blazes breaking out in February and June.