The Catalinas resort town of Catalona, about 200 kilometres (125 miles) west of Brisbane, was evacuated on Tuesday after a fire broke out at a property on the island.
Emergency services said the fire broke from the property’s basement and spread to the surrounding homes.
Residents told local media that a fire crew had tried to extinguish the blaze before it could spread.
Residents had previously reported having a fire extinguisher, but the blaze was not declared an emergency.
The town’s mayor, Robert Micallef, said the evacuation order was lifted around 4:00pm (AEDT) on Wednesday.
The evacuation order is for residents living on the Catalainas Islands property, which is the third largest in Queensland.
It covers a 2,000-hectare (1,500-acre) property which is owned by a company which also owns the nearby Kogan Creek Hotel.
Mr Micalles said the resort was on lockdown and would not reopen until the situation had been resolved.
The Queensland Government has issued a travel warning to residents in the Catallavilles region, advising residents to be vigilant of the weather and to stay away from areas with high fire risk.
Queensland Premier Annastacia Palaszczuk said the Government would continue to assist the Catals region in dealing with the fire.
“This fire was not a matter of people’s choice, it was a matter that was caused by a fire that occurred on our territory,” she said.
“The Queensland Government is working closely with the authorities to address this matter and we will continue to provide assistance to our partners to the fullest extent.”
The evacuation is not the first time the resort has experienced problems with fire, with fires also being reported there in the 1990s.
A number of hotels on the islands were destroyed by fire in 2009 and 2010, according to Queensland Government records.
The state’s fire services said at least two people died and two others were injured in the fires.
It is not yet known how many people have been displaced in the blaze.
Mr Rocha said the emergency services had been on standby at the resort since Tuesday morning and would remain on standby until the evacuation was lifted.
The Catalls resort is located on the north shore of the Cataloos, in the state’s north-east.
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