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Residents found out at a Civil Defence press conference held at 4pm today.
Civil Defence controller Roger Ball said he was very pleased to make the announcement. It comes after a risk assessment.
Police said they have been able to get staff into position earlier than expected and residents can go home immediately.
Ball stressed it was only for residents.
Returning residents must be able to demonstrate that they live there if asked by police.
Non-residents cannot go into the town until 7am tomorrow.
Acting Tasman district commander Inspector Zane Hooper asked people who are not residents to stay away.
It is inevitable there will be traffic congestion and he asked for everyone to be patient.
Police and the Defence Force will keep a high profile in the area overnight and will monitor access to the streets.
The risk of being re-evacuated remains, Hooper said, saying it was a balancing act, keeping the community safe and letting people go home.
He asked for people not to become complacent just because they cannot see flames.
Wakefield residents were urged to stay ready and be ready to evacuate again at any time.
Yesterday, there was a ban on forestry harvesting operations and the use of farm machinery in the area.
But there has been reports of cultivation in the region, Tasman Mayor Richard Kempthorne said.
In one case, cultivation was going on next to a paddock where helicopters involved in the firefighting from the air were taking off from, Kempthorne said.
If anyone sees cultivation going on, they are asked to report it to Tasman District Council.
The fire is not yet contained, fire controller Trevor Mitchell said. Fire crews are working on strengthening the lines, looking at the forecasts, and identifying the pressure points.
They got through yesterday's weather and while it's "a bit breezy" today, things are looking "reasonably comfortable", Mitchell said.
More money for Mayoral Relief Fund
In a separate press conference, Prime Minister Jacinda Ardern called the return of residents to their homes was a "significant milestone in the response to the fire".
Civil Defence Minister Kris Faafoi, who accompanied Ardern at her post-Cabinet press conference, said an additional $50,000 will be provided to the Mayoral Relief Fund to plug any gaps in funding.
He also said the Government has set up a number - 0800 779997, available from 5pm today - that anyone can ring with any queries regarding the fire and the response to it.
Ardern and Faafoi thanked all those who had worked hard to battle the fire.
The Government has already put $20,000 into the Mayoral Relief Fund, announced last week.
Faafoi said about 400 people who were evacuated earlier last week - not from Wakefield - were still yet to be cleared to return home.
Medically high-risk residents would not be able to return to Wakefield.
Hooper said it was a balancing act allowing 680 households to return.
Tasman mayor Kempthorne thanked iwi for opening their marae to help.
"It's really encouraging to know that we're very close to Wakefield residents being able to return home."
Fire will continue burning till March
Re-entry plans are also being considered for other affected valleys in the fire zone.
A total ban remained in place prohibiting the use of machinery.
Fire and Emergency's John Sutton said the weather was co-operating and dew on the ground and higher humidity was restricting fuel for the fires. However, the fire was still not under control.
Last night was "probably one of the quietest nights" for firefighters, he said.
"I've got the feeling that we're starting to turn the corner."
However, Sutton said he expected firefighters would still be battling the blaze in March.
Tasman mayor Richard Kempthorne said this morning's updates were really heartening.
For evacuated residents, he said, as soon as you can be back you will.
"It's very encouraging a return is also being considered for the valleys in the fire zone."
Offers of help to fight the fire had been received from overseas and people "from Northland to Southland" were coming to help.
Day seven of fire
Today is day seven of the devastating forest fires south of Nelson, and for the around 3000 people forced to leave their homes because of the danger posed by the 2300ha fire, it's yet another day of challenges.
Another day of displacement as they seek shelter and support away from their homes and community, another day of uncertainty as those fighting the fires continue to battle to protect homes, another day of waiting to find out when they might again sleep in their own beds.