The inferno, sparked by lightning six days ago, burnt through 71,000 hectares (175,000 acres) in Western Australia state, leaving a trail of destruction, the latest in a series of summer blazes that have so far left eight people dead.
"The weather conditions are great today and they were in the last 24 hours so we have been able to essentially contain this fire," Western Australia's Emergency Services Minister Joe Francis told national radio.
"It's not totally under control yet but we are very optimistic about the next 24 hours as well."
The fire, one of the worst to hit the region in recent years, destroyed 143 properties, including 128 homes in Yarloop which was virtually flattened, the state's Department of Fire and Emergency Services (DFES) said.
Western Australia's state premier Colin Barnett has declared a natural disaster, giving residents access to greater financial support, with the Insurance Council of Australia estimating losses of at least Aus$60 million (USD 42 million).
"They put themselves through significant danger to get through some exceptionally difficult fires to save people's lives," he said.
Bushfires are common in Australia's hotter months, with four deaths in Western Australia in November. Another two people perished in neighbouring South Australia state in the same month.
DFES commissioner Wayne Gregson warned on Sunday that the worst of the bushfire season was yet to come.
"There is still another 10 or more weeks to go in what is predicted to be a difficult bushfire season," he said.
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