The blaze swept through rugged terrain at Montrose in Melbourne's outer east on Saturday night, sparking an emergency warning for residents in its path after igniting about 9pm.
A home was lost and another significantly damaged after the out-of-control fire made a sudden run through the Ken Leversha Reserve.
The fire, which started about 1km west of the Mount Dandenong Observatory, had scorched 33 hectares as of Sunday morning.
The emergency warning was downgraded to watch and act alert about 3.30am as about 200 firefighters, four helicopters and two bulldozers battled the blaze.
Rain has since fallen over the fire ground as water bombers continue to dose burning trees.
Almost 10mm of rain has fallen at Coldstream, just north of Montrose, since 9am.
Ground crews will remain on site into Sunday evening to prevent short-range spotting throwing embers towards nearby houses.
"I'm fairly confident that we won't lose any structures today," Country Fire Authority incident controller Bernard Barbetti told ABC TV.
"There was some concern that it may spot over and get over into the Dandenong Ranges, but I can't see that happening with the conditions today."
Montrose is one of several suburbs in the foothills of the Dandenongs, Melbourne's highest point.
About 25 residents have taken shelter in a relief centre at Kilsyth Sports Centre.
Locals are not completely out of the woods due to a potential change in wind conditions.
"We expect a wind change about midday which may give us some more control problems so that's why the watch and act is still place," Mr Barbetti said.
"I'm fairly confident the fire won't spread much beyond it's current area.
"But it's a long, unburnt area. There are a lot of dead trees."
All nine Victorian districts have high fire danger ratings on Sunday as the end of the summer bushfire season approaches.
South Australian fire crews are battling blazes at Katarapko in the Riverland region and another bushfire 20km south of Lucindale in the state's lower south east.
Both are burning at advice level.
High temperatures also have firefighters on high alert across vast swathes of NSW, including Sydney, ahead of an expected cool change arriving on Sunday evening.
The fire risk is rated extreme for greater Sydney and the Southern Slopes, with total fire bans active in those regions and two others.
10°C