According to a Fire Rescue Victoria spokesperson, firefighters were called to a Lydiard Street address following reports of a fire and explosion shortly after 10pm.

Crews arrived within four minutes and found a fire in the kitchen of Reid's Guest House.

Firefighters, wearing breathing apparatus, conducted a search and evacuated the premises

Crews worked quickly to extinguish the fire, bringing it under control about 10.50pm.

One person sustained burns and was later taken to hospital for treatment.

The Ballarat Crime Investigation Unit is investigating the incident.

Detective Acting Senior Sergeant Paul Allen told The Courier the guest house had been declared a crime scene as police await a specialist fire chemist to attend the scene later today.

He said one person was helping police with their enquiries.

The guest house was evacuated in the middle of the night, meaning Uniting - which runs the facility - had a busy night.

General manager, Annette Kelly-Egerton, said all staff and 50 guests had been evacuated to the Breezeway facility.

"They've all been amazing because they were all woken up in the middle of the night and relocated. It would have been pretty scary for them."

Presently all Uniting services have come together to support the displaced guests - providing bedding for the guests to camp on the floor at Breezeway, in a safe environment.

This morning staff have been working with each individual to determine alternate accommodation.

Ms Kelly-Egerton said other services, such as Anglicare, had also been supportive and had provided breakfast to all the clients.

The full extent of the building damage is not yet understood, but the service is preparing for the guest house to be closed for at least a week.

"For us right now we are focusing on the people, who can't even go back there right now to get their clothes and other belongings. It's incredibly challenging for people."

"Right now we are focusing on the consumers who are residents at Reid's to make sure we are meeting their immediate needs," Ms Kelly-Egerton said.

"We are trying to work it all out but our priority right now is to ensure everyone has a roof over their head that is safe and secure for at least the next week."

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