The out-of-control bushfire on the South Coast was downgraded overnight, but continues to threaten properties.
The Currowan fire, which has burnt more than 24,000 hectares, is now at a watch and act advice level.
The NSW Rural Fire Service said there were unconfirmed reports of property loss from the fire, but did not provide further detail.
Gusty winds are still being felt near the fire, although crews say they have eased overnight.
The fire is now heading in a north-easterly direction towards Turmeil and Bawley Point, just north of Batemans Bay.
At the southern end of the fire, the blaze is burning north of East Lynne.
The fire crossed the Princes Highway overnight north of East Lynne between Mount Agony Road and Pebbly Beach Road.
The highway remains closed between Termeil and the Kings Highway turnoff in both directions.
NSW Rural Fire Service spokesman Greg Allan said while conditions had eased overnight, there was the potential for conditions to deteriorate later on Tuesday,
"There's a possibility of the fire being upgraded again to emergency level," he said.
"Considering the location and the potential for increased winds, residents will need to be aware."
There are 65 firefighters working to contain the blaze as of Tuesday morning.
Westerly winds are expected to hamper efforts on the fire front later in the day.
"There'll be a very high fire danger on the eastern side of the front, and it will be another trying day for our firefighters," Mr Allan said.
"We're working to prepare to defend properties in the Bundle Hill area."
Residents have been warned of a significant amount of smoke in the area.
Fire crews were assembling overnight at Willinga Park, the multi-million dollar equestrian centre owned by Canberra business man Terry Snow, to help protect properties in the area.
Evacuation centres have been set up at the Ulladulla Civic Centre and the Hanging Rock Sports Club function centre at Batemans Bay.
Residents in areas between Bawley Point and North Durras, including Kioloa, Depot Beach, Pebbly Beach and Pretty Beach have been urged to enact their bushfire survival plan.
Those living near South Durras have been advised to leave now towards Batemans Bay, while those in Termeil have been advised to leave towards Ulladulla.
Campgrounds have been closed in the Murramarang National Park and other national parks in the area.