A 14-year-old Christchurch boy on holiday in the area had admitted starting the fire, which burned 150sq m of land and resulted in 20 volunteer firefighters from Clyde and Alexandra being called out, Sergeant Ian Kerrisk, of Alexandra, said.
The boy would be dealt with by the youth justice system and had been released into the custody of his parents.
The fire danger in Central Otago is classified as extreme.
The Clyde incident followed two major fires in the district in the past week - one at Roxburgh on Friday which destroyed a home and 40ha of land and another which burnt 20ha of conservation land near Alexandra last week.
"The consequences of this one were almost catastrophic," Sgt Kerrisk said.
Strong northwest winds were blowing and without the rapid response of the fire crews, and a driveway that separated the nearby houses from the burning section, the outcome could have been disastrous, he said.
"It was a recipe for disaster and if it had got into that stand of willow trees, it could so easily have been another [like the] Roxburgh [fire]."
The fire alarm was raised just after 3pm after the fire had taken hold in Miners Lane, near Clyde Lookout Rd, on a section of land covered in shrubs and mature pine trees, close to willow trees and four or five houses.
Clyde fire chief Richard Davidson said 10 firefighters from Clyde and the same number from Alexandra attended.
He described it as "potentially disastrous".
"This place is like a tinder box. It's unbelievably dry."
Although it was brought under control within an hour, the fire would continue to burn for a long time as it would reach the roots of the trees and shrubs on the section, he said.
"It went up so quickly; it just went berserk."
Sgt Kerrisk said police would recommend the young offender attend a Fire Service course aimed at making young people aware of the consequences of deliberately-lit fires.
There had been a lot of publicity about the total fire ban in the area and he urged parents to keep an eye on their children and be aware of their actions.
The question of any costs would be up to the youth justice system, he said.
Sgt Kerrisk said police were grateful to members of the public who had identified the person allegedly responsible for starting the fire.
