Firefighters were called to Yallourn coal mine on Tuesday after a blaze broke out in an unused part of the operation.
The Country Fire Association described the fire as a “minor flare up” and said firefighters were able to bring the situation under control quickly.
Smoke from the fire led to very poor levels of air quality in the nearby township of Morwell.
President of community group Voices of the Valley, Wendy Farmer, said Morwell residents were “concerned” about the smoke yesterday.
Last March a fire at nearby Hazelwood coal mine burned for 45 days, sending thick smoke into that severely affected air quality.
This is not the first time the Yallourn mine has been affected by fire. In February last year a grass fire burnt parts of the mine which were also not in use.