Residents in parts of Dunedin are being told to stay indoors due to smoke from a fire at a rubbish tip.

Firefighters are still battling the 20x30m blaze at the Green Island Landfill on Brighton Rd, and they are working with staff at the tip who are using their diggers to break up the rubbish pile.

Light winds are covering houses in the area in smoke.

Fire Service southern communications shift manager Andrew Norris said they received a call about the fire at 3.20am this morning.

"We're advising residents to keep their windows and doors closed, and to stay indoors particularly if they have respiratory issues.

"At this stage the fire is contained, but crews are still fighting it."

Police have closed off the landfill to the public.