Two helicopters are water-bombing a blaze that is threatening 25 Lithgow homes.
Local Fire Captain Paul Carter told Fairfax Media they were called at 4.30am on Wednesday about a fire in a valley known as the Vale of Clwyd.
"It was pretty spectacular this morning, the whole mountain was ablaze, " Mr Carter said. "But we don't think we have too many problems at this stage."
The wind was down and not causing any trouble, he said.
Two fire trucks with eight local firefighters – along with a truck of RFS officers – will remain on site as part of their property protection strategy.
Police and RFS officers are investigating several possible ignition points as local speculation mounts that an arsonist was responsible.
Homes along Berry Street are preparing to evacuate but most locals are confident they remain safe.
Jackie Harper, who has lived on Berry Street for 14 years with her sons, has the family's bags packed and the cat and dog ready.
"We were ordered to leave this morning. At that stage the whole hill was glowing, but we've seen four or five fires before and we've been fine," she said.
"We are watching and waiting to see. It doesn't look too good now, it has not come down the ridge like this before," she said.
"I just hope there is enough personnel to cover it."
At midday on Wednesday, the RFS said there were 134 fires burning and 31 were uncontained.
There were 414 fire trucks, 2000 firefighters, any many more on standby, and over 340,000 hectares burnt.
RFS Assistant Commissioner Rob Rogers, after only a "few hours sleep", told Fairfax Media the massive combined effort will continue at similar levels to Tuesday, when there were "catastrophic" fire conditions in parts of NSW.
A favourable change in the weather has eased conditions, Mr Rogers said.
But now there are "severe" fire danger ratings for areas in the Hunter region all the way to the Queensland border and as west as Moree.
"We now have a lot of new fire threats that have been benign up to now," he said.
"Their risk goes into Queensland, so there is a whole new part of the state under threat."
The Rural Fire Service will focus on Deans Gap in the Shoalhaven that on Tuesday jumped the Princess Highway and put Sussex Inlet under threat.
"There is a lot of fire there, it's the west side of the highway that is the significant problem," he said.
Before midday, the RFS said cooler conditions have eased fire conditions, but the potential threat to properties remains.
Crews have been deployed along Sussex Inlet Road to protect properties.
Evacuation centres are open in Sussex Inlet at the bowling club and the RSL.
Sussex Inlet Road and the Princes Highway are both open.
Another fire at Harden, 18 kilometres west of Yass, was one of the hardest to hit on Tuesday as record temperatures soared across NSW.
"That fire ran a long way. There are reports it burnt 1000 stock and a building was lost. We have teams today assessing the damage," Mr Rogers said.
Mr Rogers said it was "disappointing but a good result" in regards to three juveniles charged for starting a fire in Shalvey, in Sydney's west.
"Arsonists will be caught," he said.
The Premier Barry O'Farrell and Rural Fire Service Commissioner Shane Fitzsimmons on Wednesday will tour fire affected parts of the state.
