The emergency situation declared for the town of Tennant Creek and surrounding areas has been downgraded as police begin investigating what started the 10,000 sq km bushfire.
The Barkly Complex blaze has been burning for more than a week and inched closer to Tennant Creek's 3000 residents on Wednesday and Thursday, when it broke a number of containment lines.
Chief Minister Natasha Fyles said Australian Defence Force crews deployed earlier in the week to help the fire effort would most likely be released early next week.
"We are seeing conditions moderate, but it is still very serious," she said on Friday.
"The fire did jump some lines last night, but everything is under control and with more moderate conditions we're able to lift that emergency situation."
The declaration made on Tuesday gave police powers to evacuate people who were in the line of the fire, though no evacuations were made in Tennant Creek.
Some residents have been complaining of breathing issues as heavy smoke continues to hang around the area.
Incident controller Tony Fuller said residents were not yet out of the woods, saying more work needs to be done.
"I imagine at this stage it will probably be another three or four days before we can actually de-escalate and return the community back to normal," he said.
Five water bombers and two helicopters are still stationed in the town and will continue to battle the blaze.
Police say they cannot rule out arson.
"It could be accidental. But it's been introduced, we know that. By whom? We're not sure," NT Police Commissioner Michael Murphy said on Friday.
"Unfortunately, a lot of these fires are deliberately lit... we're lucky no one has lost their lives.
"If you light a fire prepare to face the consequences."
One person has been arrested for allegedly deliberately starting a different fire earlier in the week.
The watch and act alert issued for Tennant Creek has been downgraded to an advice level, though another fire has taken off in the Gregory National Park.
The chief minister said the Barkly blaze was "just the start" of a tough few months.
"I am worried. It's anticipated that there'll be a quite significant fire season across the east coast and other areas of Australia," Ms Fyles said.
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