It continues to burn within the Holsworthy Range and around Barden Ridge, the New South Wales Rural Fire Service said.
It is believed the fire was started deliberately near Leacocks reserve in Casula on Saturday and was burning towards Sandy Point, Pleasure Point and Voyager Point early on Monday morning.
Hundreds of firefighters are desperately working to bring the large bushfire under control, however the number of officials has been reduced to 250 from 500.
The RFS said in an alert at 6am (AEST): “Residents in the area of Sandy Point and Alfords Point should continue to monitor the conditions as they could change quickly.
“Residents in Illawong, Bangor and Picnic Point are experiencing ember attack and should continue to monitor for any new spot fires in the affected areas.
“Firefighters are in these areas and are ready to undertake property protection if required.”
Authorities said residents in Voyager Point, Pleasure Point, Sandy Point, Alfords Point, Barden Ridge, Illawong, Menai and Bangor “should remain updated throughout the night by checking the NSW RFS website”.
Heathcote Road has been reopened with reduced speed limit, but New Illawarra Road is closed between Bangor Bypass and Heathcote Road.
The fire has spread through the Moorebank, Wattle Grove, Menai and Heathcote neighbourhoods but RFS spokesman Greg Allan told AAP it was too easy for emergency crews to assess the fire’s impact.
He said: “We have had reports of impact on properties in west impact on properties in west Menai and Barden Ridge but our crews at the moment are solely focused on fighting the fire.”
Police believe the fire may have been deliberately lit and are appealing for witnesses to contact them.
Residents in a number of neighbourhoods on the outskirts of Sydney have been warned to monitor the situation carefully until the blaze is brought under control.
However the Rural Fire Service assistant commissioner Shane Fitzsimmons said no homes had been lost and the damage had been relatively minor.
The result was described as “extraordinary”.
Australian prime minister Malcolm Turnbull has praised the courage of the emergency staff and volunteers.
Mr Turnbull said: “We have to deal with the worst that mother nature can throw at us, and the worst Australians are presented with by nature, the better it brings out the Australia spirit.”