The blaze has been declared a Civil Defence emergency.
"This was extreme fire behaviour, there was no way we could stop this fire," a Fire Services spokesperson said.
Shortly before 1pm RNZ reported the fire remained out of control in an area of the Moutere Basin, and had burnt a large area of forest owned by Tasman Pine Forests.
Firefighters say it could be up to four days before the blaze is extinguished, RNZ reports.
In an update after midday the Nelson City Council said about 170 homes had been evacuated, the latest in the Pigeon Valley South area.
This morning, fire crews were hoping a wind change from southerly yesterday to northerly today would help slow the fire spread.
Tactics today included a "massive air attack", involving fixed-wing aircraft, and also heavy machinery on the ground to create fire breaks.
They did not yet know how many properties had been destroyed, but there were reports of damage.
The fire also came close to destroying the Eves Valley sawmill, but some "sterling work" kept that intact, he said.
They had no idea how the fire started, but believed it began outside of the forestry blocks.
The New Zealand Defence Force had stepped in to assist providing a RNZAF C-130 to fly police and fire personnel from Wellington to Nelson, and three fire trucks and seven firefighters.
Police spokesman Zane Hooper said people who have not been evacuated should make sure they have access to radio or cellphones that have the ability to receive messages and updates through mainstream media.
Anybody who was evacuated from the fire area needed to go to the evacuation centre at St John's Anglican Church on Edwards St, and record their details there.
"This is a fast moving situation," Hooper said.
Police had about a dozen staff working yesterday and overnight going door to door warning of areas being evacuated.
Nelson Tasman Civil Defence group controller Roger Ball said anybody evacuating should take essential items, including food, water, clothing, medicines and pets.
Tasman mayor Richard Kempthorne said at 8am they had declared a civil defence emergency.
The declaration gave authorities at work powers to "do things they need to do", Kempthorne said. This included allowing police to evacuate people quickly to protect them if necessary.
"It is a horrendous fire. It started yesterday afternoon and travelled really quickly.
"You always hear of fire, but to see it last night and experience it the way we did was amazing."
Kempthorne said he and Nelson mayor Rachel Reese were personally affected by the fire with property in the area.
"All they were able to do was leave, there was stock involved, that was the case for a lot of people."
He recommended affected people make their way to the welfare centre at St John's Anglican church, where volunteers were doing a "tremendous job" offering food and support.
"A lot of people have been rattled by this."
Despite the tinder-dry conditions they had "no expectation" fire could break out like it did.
"This is a well-run forest. This just shows the exposure we have when a fire breaks out."
"A week or two ago we started closing blocks of forest to the public, there is a lot of walking and mountain biking there, and some people thought, 'I am not going to light a fire, what is the risk?'
Last night we saw the risk. It just takes off so quickly."
Kempthorne said it was a warning for areas around the country with forestry and experiencing dry conditions.
The fire that started yesterday afternoon in Pigeon Valley had doubled in size overnight and spread to cover 1870ha within a perimeter of 20km by 3am, a Fire and Emergency NZ spokesman said.
Civil Defence Minister Kris Faafoi says crews battling the fire have been given all the equipment they need.
He says additional aerial resources are on their way to the region to ensure if the blaze spreads any further they're in a position put it out as quickly as possible.
Fanned by southerly winds over most of the night the fire has caused material damage from Pigeon Valley north to the Inland Moutere Highway and Waimea West Rd.
People have been evacuated from Eves Valley, Golden Hills Rd, Redwood Valley Rd, Mallings Rd and Greenacres Rd.
Notices of potential evacuation are in place for top end of Sunrise Valley and Deep Dale Rd in Upper Moutere and Pigeon Valley.
There have been no reports of injury or worse.
