A class action lawsuit has been launched over a major fire at a recycling processing plant in Melbourne last week.

Residents near the SKM Industries factory at Coolaroo were forced to evacuate after a blaze at the recycling plant generated huge plumes of toxic smoke and ash.

More than 70 residents and businesses have signed on for class action proceedings against SKM soon to be launched by Maddens Lawyers.

“We believe there will be several hundred people affected and of that several hundred we've been in contact with approximately 70 [people],” lawyer Brandan Pendergrast told the ABC.

“Clearly the impact of carbon particles, soot, dust, ash, toxic fumes etc has physically impacted on the residences of the immediate community, in many instances causing people to evacuate their homes for several days.

“There are many people with whom we've been in contact who report impacts on their health and many people are still under medical care as a result of the impact of the fire,” he said.

The fire is under control but still burning, and is expected to continue to burn for several days.

Emergency services including specialist teams from South Australia and the ACT are working on the blaze.

Reports say smoke is still visible in the area, but authorities say there is no longer any threat to local communities.

A temporary evacuation and health assessment area operating at the Broadmeadows Leisure Centre has now closed.

The lawyers say it is not the first such event.

“As we understand it presently there have been a number of previous fires including in February and June of this year,” Mr Pendergast said.

“We're also told those previous fires have led to people evacuating their residences as well.

“So clearly this sort of event has occurred previously and is a significant risk factor in the operation of the recycling plant.”

SKM says the fires are linked, in that the second was caused by unusual stockpiling practices necessitated by the first fire.

The company has commissioned an independent investigation into the cause of last week's fire, and apologised for the public impact.