Two fire appliances from the Milton Volunteer Fire Brigade and a tanker from Balclutha were used to control the fire.
Crews were called out at 12.30am and took more than two hours to get the fire under control.
Milton Deputy Chief Fire Officer Robbie Philip said a group of young people who had been living in the crib had built a fire just outside the holiday home and it appeared embers from the fire may have blown inside the crib and set it on fire.
The exact cause of the fire had yet to be determined.
The fire was "well involved" by the time fire crews arrived at the scene, 15km east of Milton and Mr Philip said firefighters could do little apart from stopping the fire spreading.
Crews left the scene about 5.30am but were briefly called back about noon yesterday after reports smoke was issuing from the roof cavity.
The flare-up was dealt with quickly, Mr Philip said.
