Bushfires: Thousands evacuated from Australian tourist haven

Thousands of residents and holiday makers have been told to evacuate a swathe of Victoria as soaring temperatures and strong winds fan massive bushfires in the Australian state.

With the mercury set to top 40 degrees Celsius (104 Fahrenheit) in Melbourne, authorities urged an estimated 30,000 tourists to leave East Gippsland, an area half the size of Belgium.

The fire danger is forecast to be extreme in seven of the state's nine districts and threatened to close the Princes Highway, a major road artery in the region.

The warm front is heading rapidly into New South Wales (NSW), with temperatures expected to spike on New Year's Eve as hundreds of thousands gather around the harbour city of Sydney to watch its famous firework celebrations.

Almost 900 homes have been ruined and 3.48 million hectares (8.6 million acres) of land burnt in NSW this bushfire season, while Sydney has been smothered by smoke for weeks on end.

There had been fears the fireworks might have to be cancelled, but authorities so far are planning to push ahead with the show.

Fire warnings also stretched from Western Australia through South Australia to Tasmania, in what has already been one of the toughest bushfire seasons on record.

Bowing to political pressure, the federal government said on Sunday it would compensate volunteer firefighters for loss of income given the intensity of this year's bushfire season.

Prime Minister Scott Morrison said payments of up to A$6,000 ($4,186) would be available for eligible crews who had spent more than 10 days in the field this season.

Morrison returned home early from holidaying in Hawaii ahead of Christmas amid criticism his government was doing too little to address climate change and a country-wide drought.