Firefighters were called to the blaze on Grey Street at 4.24pm on Saturday and arrived to find the shed at the rear of the house fully engulfed.

A neighbour, who did not want to be identified, said he was inside his home and heard several explosions.

He said he ran outside and the sky was filled with black smoke and he called the fire brigade.

At this stage the cause of the incident is unclear.

CFA brigades from Terang, Noorat, Camperdown and Warrnambool responded to the incident which was declared safe at about 5.45pm.

Police also attended and blocked off traffic and Powercor was also called.

EARLIER: FIREFIGHTERS have been called to a fire in Terang.

Six vehicles are responding to a building fire in Grey Street.