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Building blaze near Sydney's Circular Quay

A worker's blowtorch has been identified as the cause of a construction site blaze in Sydney's CBD which forced the evacuation of thousands of workers as gas bottles exploded.

The fire started in the lower levels of the 10-storey building on a demolition site near Circular Quay on Tuesday about 8.45am.

Fire investigators tracked the cause of the blaze to one of the construction workers' oxyacetylene blowtorches, a Fire and Rescue NSW spokesman told AAP.

The flames quickly spread up the plastic mesh screening surrounding the scaffolding.

Neil Van der Hoek, who works on the 22nd floor of an opposite building, heard explosions.

"We could see flames through the kitchen window, there were two explosions, from gas bottles I think. We could feel the explosion through the window," he told AAP on the street outside.

"The plastic sheeting on the outside caught on fire and dropped down onto a forklift."

Fifteen fire crews, including specialist HAZMAT and ladder-units, battled the blaze for nearly two hours.

Twenty-four construction workers at the Pitt Street building were evacuated with 13 treated for minor smoke inhalation on the scene by NSW Ambulance

A 200-metre exclusion zone was established as a low-level toxic smoke spread in the air from the burnt plastic netting, and while authorities assessed the threat of building collapse and explosions from gas cylinders inside.

"The fire had some challenges in that there were a number of gas cylinders on the building site that not only exploded during the height of the blaze but (others) were also affected by the heat," Fire & Rescue NSW Superintendent Andrew Ticehurst told reporters in Sydney.

"There was some significant dangers to the firefighters with the gas bottles exploding, as well as it being a building being under demolition, there (were) some concerns around how stable the building (was)."

Thousands of office workers poured into the streets as a number of buildings around the site were evacuated

Ground-level smoke also caused the closure and evacuation of Circular Quay railway station.

Supt Ticehurst said damage to the interior of the building site was significant and police and firefighters remained on site during the day to mop up.

Sarah Halliday was on her way to work when she saw the flames.

"There were two workmen trying to put the flames out from the roof with a small hose," she told AAP.

"It got bigger as I left and I heard a few explosions as I got farther away."

© AAP 2018

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