The woman, who declined to be named, said she was at home sick yesterday and had been asleep on the couch when she was woken by the sound of a loud pop about 1.50pm.
"I heard a pop, and came to check what had happened, and there was smoke filling the passage.
"Smoke was pouring out the bedroom window."
She said she called the fire brigade, closed all the doors and left the house.
Balclutha Chief Fire Officer Graeme Fergusson said firefighters donned breathing apparatus after arriving to find a large part of the Sunflower St house filled with smoke.
As firefighters entered the bedroom, the bedding burst into flames, he said.
"Once that was extinguished, we found the cause of it was a hand-held hair-drier.
"A well-established reason for property fires is those small electrical appliances, and one reason is the condition of the wires."
Mr Fergusson said over time the wires in the cord became twisted and kinked, which, when left plugged in, could cause the appliance to ignite.
"The house has newly hard-wired smoke alarms, which never activated."
It is important to check smoke alarms on a regular basis, he said.
The bedroom received minor smoke damage.
The woman told the Otago Daily Times she had learnt from the incident and would be warning others of the risk of leaving appliances plugged in.
- The Balclutha Volunteer Fire Service was called to a small fire at Silver Fern Farms, on Yorston Rd, about 4.20pm yesterday.
Mr Fergusson said there was a fire in a sawdust-filled hamper, about five floors up in the boiler system.