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Only about 12 people remain at Tamboon and most of them sought protection by the water overnight, the State Control Centre said on Wednesday.
An emergency warning remains in place for the fire, but authorities are maintaining contact with the group and a Victoria Police boat is available to get the residents if they need to leave.
It's the only emergency warning active in Victoria's fire-ravaged East Gippsland and northeast, as milder conditions provide a slight reprieve for fire crews to get on top of containment lines.
But the winds have spread the thick smoke from the fire zones and blazes in NSW across the state, causing hazardous air quality in seven regions, including the Melbourne CBD and Geelong.
At the Australian Open, players on Tuesday complained about the smoke and Slovenia's Dalila Jakupovic had to retire from her match when she collapsed to her knees in a coughing fit.
Racing Victoria has abandoned meets at Caulfield and Yarra Valley due to the poor air quality, it tweeted on Wednesday.
There are 17 fires still going in Victoria and more than 1.4 million hectares burnt.
There are 1500 firefighters battling the blazes, including 130 from overseas and another 140 international personnel will arrive later in January.
The smoke haze is expected to lift as a wind change and rain moves through, but sporadic thunderstorms are also forecast.
There are fears the rain will cause flash flooding and land slips in fire-affected areas because of the loss of vegetation and that lightning could spark even more fires.