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Combustible cladding was once again at the centre of a building fire in Melbourne yesterday.

Residents have been forced to evacuate the building which is located at 200 Spencer Street.

The fire started on a 22nd-floor balcony shortly before 6:00am, and spread up the exterior of the building to the 27th floor.

The Metropolitan Fire Brigade (MFB) said a lit cigarette was the most probable cause of the fire which ignited combustible materials stored on the balcony.

MBF chief officer Dan Stephens confirmed the building was clad with similar materials used on London's Grenfell Tower, in which 72 people died in 2017.

"It is my understanding that the building is cladded [sic] with aluminium composite materials, the sort of cladding that was on the Grenfell Tower," he said.

Metropolitan Fire Brigade assistant chief fire officer Trent Curtin said the emergency response to the fire was escalated as soon as they knew the building had cladding on the outside.

"The combustible cladding appears on small parts of the building around the balconies and we believe at this stage the combustible cladding will have been one of the fuels that escalated the fire," he said.

The City of Melbourne issued an emergency order preventing residents from returning to their apartments for 48 hours.

A council inspection of the building has found the fire affected "essential safety measures" including the sprinkler system and fire alarms.

In 2014 a fire at the Lacrosse Tower also raised concerns about aluminium cladding which has been used on thousands of buildings across Australia.

It led to the introduction of combustible cladding bans in a number of states including NSW.

Corporations can be fined up to $1.1 million and individuals up to $220,000 for using any cladding with a core comprised of more than 30% polyethylene.

Building owners and strata bodies of affected buildings can now be issued rectification orders under the Building Products (Safety) Act requiring them to undertake remediation and removal work.

If rectification orders are not acted upon corporations and strata body directors can face 2 years imprisonment or a fine totalling $110,000 per day until the matter is addressed.