A large fire is burning at a furniture factory in Sydney's inner west.

"It's big," a spokesman for Fire and Rescue NSW said.

Twelve fire crews are fighting the blaze at Hardwood Designs at the back of Brompton Street, Marrickville. Two of those crews are on raised platforms.

The spokesman said the fire had been contained from spreading to nearby factories but expected it to continue burning for some time.

"There’s plenty of timber in there," the spokesman said.

The spokesman said the owner of the factory told fire fighters he believed the fire may have been started by an electrical fault.

"They were spraying lacquer on the furniture, they heard a crackling noise and the next thing you know the fire was burning away," the spokesman said.

A worker in a nearby factory who did not want to be named said the burning building had collapsed after a fire that started about 3.30 pm.

A resident across the road from the factory said the blaze reached its peak about 3.45pm.

"You could see the flames, easily three to four stories high," she said.

But the fire has lost intensity. "The black billowing smoke has stopped," the resident said.

The cause of the blaze is not known.

It is not known if anybody has been injured.

Police and ambulance officers are also on the scene.

The fire is expected to cause significant delays for peak hour traffic. Victoria Road is currently closed in both directions. Motorists are urged to avoid the area and seek alternate routes.