The circumstances surrounding a South Dunedin house fire in which a body was discovered remain unexplained, police say.

The body was discovered inside a Loyalty St house on Friday after a small fire had been extinguished.

Four crews of firefighters from across Dunedin were called to the scene and a large police presence was visible alongside the firefighters.

Police remove a body from the scene of a house fire in Loyalty street, where an orange tarpaulin hangs from the house under investigation. Photo: Stephen Jaquiery

A neighbour said the fire was small and was contained in to a laundry, housed in a shed separate from the main house.

Police and staff in white forensic suits were present for much of the day.

Detective Senior Sergeant Hayden Smale said on Tuesday police were continuing to investigate “the fatal house fire”.

"A scene examination has been completed, and are inquiries are being undertaken.

“The incident remains unexplained.”

The dead person had yet to be formally identified. 

- Allied Media