Victoria has extended its unprecedented state of disaster as fire conditions are forecast to worsen in coming days.

Premier Daniel Andrews said the declaration, which increases government and agency powers to move people out of affected regions, would continue for East Gippsland the Alpine region and the state's northeast.

The warning comes as Kangaroo Island communities are again under threat after its fires broke containment lines.

In better news, Western Australian mining magnate Andrew "Twiggy" Forrest announced he will spend $70 million on a bushfire recovery package for fire-affected communities.

Authorities are urging people to leave the Alpine region and all areas in East Gippsland east of Bairnsdale as another round of dry lightning, combined with a forecast wind change, could potentially cause fast-moving fires across the state from Friday.

"We have forecast conditions of extreme danger, very significant fire activity is likely off the back of a hot day today, a hot day tomorrow," Mr Andrews told reporters on Thursday.

"A change is not coming through in the east of the state until late afternoon tomorrow and in the northern part of the state not until the evening on Saturday.

"This means that we have every reason to believe there will be significant fire activity over the next 48 hours and that means it is appropriate that we continue the state of disaster."

Victoria extends state of emergency as Kangaroo Island flares up again_1
Inset: Firefighters have been making the most of the weather to prepare. Photo: AAP

Emergency Management Commissioner Andrew Crisp said there are 23 fires burning across the state and more than 1.2 million hectares had been burnt since November 21.

"You should not be there. It is a very dangerous and dynamic situation that will confront us over the next 12, 24 and 36 hours," Mr Crisp said.

The fires in Victoria have destroyed 244 houses and 400 other structures and three people have been killed. About 2800 properties have been assessed for damage to date.

The third victim was confirmed on Wednesday – Forest Fires Management worker Mat Kavanagh, 43, died when his vehicle crashed in Thornton on January 3.

The NSW Rural Fire Service has confirmed that 1870 homes have been razed by bushfires this season in the state, with that number likely to rise as assessments continue.

The RFS said a further 753 homes had been damaged this season.

NSW fire crews have been taking advantage of cooler conditions this week to prepare for another challenging day Friday, with hot weather expected in several areas.

Winds with peak gusts of up to 90km/h are expected with a risk of thunderstorms in the eastern ranges and eastern parts of the state as part of a change.

Up to 10mm of rain may follow in Gippsland with some isolated falls of up to 20mm.
Uncontrolled blaze

On Kangaroo Island, the Country Fire Service has advised the fire has broken containment lines and was burning toward the township of Parndana.

The main road to Parndana has been closed and defence force  personnel were helping people to evacuate.

"Overnight and into this morning, crews have been actively fighting outbreaks at Deep Creek Gully, Bark Hut and Yarda. These outbreaks remain uncontrolled," the CFS said.

"The wind direction has already changed today and further changes are expected."

Victoria extends state of emergency as Kangaroo Island flares up again_2
Inset: The Kangaroo Island fires have broken containment lines. Photo: AAP

Police and the CFS evacuated the town of Vivonne Bay on the south coast on Wednesday amid fears homes could not be protected should the fire move quickly into the area.

Fire has already claimed two lives on the island and destroyed 160,000 hectares including most of the Flinders Chase National Park.
Forrest fund

Mr Forrest said he would provide $10 million to build a volunteer army of more than 1200 people drawn from the mining and agriculture sectors to deploy to fire zones to assist in the rebuild of devastated communities.

A further $10 million would be spent via his Minderoo Foundation in communities who need support in collaboration with the Australian Red Cross and the Salvation Army.

Another $50 million would be spent on a "national blueprint" for fire and disaster resilience to develop new approaches to mitigate the threat of bushfires.

Mr Forrest's announcement came after NSW Premier Gladys Berejiklian committed $1 billion to help rebuild bushfire-ravaged communities in the state.

The money will go toward repairing and rebuilding damaged infrastructure including roads, rail lines, bridges, schools, health clinics and communications facilities.

It comes on top of more than $200 million already committed by the NSW Government, and a $2 billion national fund provided by the Federal Government.

Ms Berejiklian said her Government's money would be used for infrastructure, while the Federal funds would go directly to people.

-with AAP