The bushfire that damaged one home and forced the evacuation of residents in Glen Iris on Saturday has been given the all clear.

Department of Fire and Emergency Services has this morning downgraded the alert level saying the blaze has been extinguished.

The bushfire, which was allegedly started by a lit cigarette butt, burnt through 168ha of land in Picton and Glen Iris after starting about 1.30pm on Saturday.

Firefighters will continue to monitor the area today and while the danger has passed, residents have been told to remain vigilant.