The Kallaroo Road and Redwood Forest fires in the northern suburb of Piallago merged to create the Beard fire, spanning 424 hectares on Thursday afternoon.
The fire is burning within containment lines and has been downgraded from an emergency warning to watch and act level.
Canberra's airport has reopened with Qantas operating a limited service, but Virgin and Singapore Airlines have cancelled flights for the rest of the day.
People in Beard, Harman, Oaks Estate, Crestwood, Pialligo and Brindabella Business Park are being told to follow warnings and information for the Fire.
Firefighters are on the scene and helicopters are water-bombing and providing aerial surveillance.
A recycling centre in Beard is on fire, producing dangerous levels of thick, black smoke which will reduce visibility and air quality.
People in Beard, Harman, Oaks Estate and Crestwood are being told to stay inside to avoid the dangerous smoke.
There are unconfirmed reports of building damage, the ACT Emergency Services Agency said.
People in Pialligo and Brindabella Business Park, near the airport, have been advised to stay up to date and monitor conditions.
Head of the ACT Emergency Services Agency Georgeina Whelan urged people in the area to continue to monitor conditions.
"The fire is still classified as burning out of control but it is burning within containment lines which is very good news," she told reporters.
The ESA's website is down, prompting the agency to direct people to ABC radio broadcasts and its social media pages for fire information.
Earlier, Ms Whelan said a firefighter had suffered minor injuries but has since been treated and would continue fighting the blaze.
"Over the next 24 hours we can expect cooler temperatures and lighter winds. This however, will not ease for some time so we continue to expect to fight through both urban and rural firefighting throughout the night."
ACT Chief Minister Andrew Barr has told Canberrans to avoid the Majura area and Canberra airport.
"If you have a flight booked it's best to stay where you are and to contact your airline for updates on your flight schedule," he said.
Queanbeyan's David Campese Oval has been set up as an evacuation point, and buses will be shuttling people from there to the Dickson College relief centre.
The blaze started on Wednesday but strong winds and high temperatures have seen conditions in Canberra deteriorate.
ACT emergency services have issued a total fire ban.
Canberra's state of alert will continue through to the end of the Australia Day long weekend.