The Western Distributor was finally reopened shortly after midnight on Thursday morning after engineers inspected the fire site and crane at Barangaroo and pronounced them safe.

Despite earlier warnings from the Transport Management Centre that the road funnelling traffic onto the Harbour Bridge and into the city would be closed during Thursday morning's peak hour, it was reopened after the fire was largely extinguished.

The Western Distributor was reopened in both directions about 12.30am, and all major roads were open in the city on Thursday morning.

Police said there would be some minor delays on Hickson Road and Sussex Street on Thursday, as the fire was still active and emergency vehicles need to access the site.

‘‘Pedestrian access in the immediate area of the site will continue to be restricted until the fire is extinguished,’’ police said.

Police Assistant Commissioner Mark Murdoch said only minor street closures remain in place as the fire still burns on Thursday morning.

"By and large it's business as usual for the morning commute," he said.

Mr Murdoch said the fire caused more than 2000 people to be evacuated from nearby office blocks, other construction sites and other businesses.

"Many thousands" more had been inconvenienced by closure of the Western Distributor for close on 10 hours.

"The disruption, whilst regretted, was unavoidable," Mr Murdoch said.

Workers are allowed back into those buildings on Thursday however the Barangaroo site will be closed for the day.

NSW Fire and Rescue says while the fire continues to burn but they are confident it will be extinguished by the end of Thursday.

Crews spent the night trying to keep the blaze at a manageable level before they could re-enter the basement and fight the fire at first
light on Thursday.

Barangaroo developer Lend Lease on Thursday again apologised for the disruption caused.

The company's chief operating officer, Dan Labbad, said while the crane had been deemed safe by engineers it would still be dismantled
over coming days.

He has defended Lend Lease's safety record dispute it being the second fire on one if its Sydney construction sites in the last 18 months and the death of a worker at Barangaroo in January.

"Safety is out first priority," Mr Lebbad said. "If you look at our international standards they are as good as they come.
"I think you'll find that our safety record is fantastic. It's our first priority and always will be."

A Transport Management Centre spokesman said traffic on Wednesday night began easing around the Harbour Bridge about 7.30pm, and on the Anzac Bridge at about 8.30pm.

‘‘The buses probably took a bit longer to recover, due to the fact that it took longer to head out and come back in so there was a knock-on effect,’’ the spokesman said.

"The road had been closed due to safety concerns over a crane affected by fire at the site," the TMC said in a statement.

"The closure was expected to remain in place throughout Thursday morning, however engineers have now deemed the site to be safe, and the road has been reopened."

A plume of acrid smoke blanketed the central business district on Wednesday, and firefighters worked through the night to extinguish the fire, thought to have been started by a welding accident.

Late on Wednesday night a team of two fire crews were finally able to access the basement at the centre of the fire.

On Wednesday, citybound traffic was backed up past North Sydney and bus commuters faced 45 minute delays as the air pollution worsened.

Childcare centres were forced into lockdown to avoid the smoke, but emergency authorities insisted there was no risk of airborne toxic particles despite a history of soil contamination at the site.

By 11pm on Wednesday, the fire – which WorkCover believed was caused by a welding accident about 2pm, then spread to two levels of formwork at the base of Tower 3 – was still burning and had caused significant enough damage to a large crane sitting on a concrete slab above the basement to prompt fears it would topple.

The union representing workers on the project, the CFMEU, warned that the blaze could delay construction on the residential and retail hub by ‘‘months’’.

This claim was strenuously denied by Lend Lease, the project manager. ‘‘It is too early to speculate what impacts, if any, there will be on the project,’’ a Lend Lease spokeswoman said. The NSW secretary of the building union, Brian Parker, said it was likely work would stop at the southern end of Barangaroo for the remainder of the week.

‘‘It wouldn’t be unrealistic that it would go the rest of this week into the end of next week before there is any resumption of work,’’ he said.

‘‘It’s certainly going to push back the project. This could push this back for months.’’ Mr Parker said once the fire was extinguished, the crane would need to be safely removed, then the integrity of the timber, steel and concrete would need to be tested by engineers. Some would need to be removed and rebuilt, he said.

Lend Lease said only work on Barangaroo South was affected and there was no impact on work on the headland part of the site.

By the afternoon, an estimated 25,000 vehicles that typically travelled along the Western Distributor were funnelled onto other roads, gridlocking the city.

"The objective is to make the crane safe tonight with a view to having the Western Distributor opening for the morning,’’ a spokesman for Roads Minister Duncan Gay said.

By Wednesday night, Fire and Rescue NSW Superintendent Ian Krimmer reported from the site that firefighters had brought the temperature in the basement down from 1100 degrees to 45 degrees, as measured by a laser thermometer.

This had allowed them to launch an ‘‘offensive attack’’ with two fire crews getting inside the basement on 10-minute rotations.

Superintendent Krimmer said the smoke plume had decreased considerably by 7pm.

While the smoke had been an irritant, ‘‘the levels haven’t been a health risk outside the exclusion zone’’, he said.

Water run-off into the harbour was also being assessed to check for pollution, he said.

The Environment Protection Authority ruled out any threat from asbestos, a hazardous substance that had halted work on the site several times in the past couple of years. ‘‘We don’t have any concerns [about asbestos],’’ an EPA spokeswoman said, noting the site of the fire had been excavated and the fill removed.

The EPA also denied there were any risks from other contaminants known to be in the site, including the former Millers Point Gasworks on Hickson Road located to the north of the blaze site.

with Amanda Hoh, Jacob Saulwick and  Lucy Carroll