Trapped residents were ready to jump

Panicked residents who were trapped in a burning western Sydney unit block were preparing to jump for their lives.

About 20 people were eventually rescued by firefighters on ladders from windows and balconies of the three-storey Villawood building after the fire broke out before 2am on Wednesday.

Superintendent Ian Krimmer described a scene of panic with people yelling from windows.

"There were people about to jump, I believe some people actually had some mattresses out ready to throw down and then jump onto," he told ABC Radio.

"The firefighters have called out to them and said `stay where you are' and got their ladders up quickly."

NSW Ambulance said eight were assessed by paramedics and five adults were hospitalised with minor smoke inhalation, including a 72-year-old woman and two men, aged 65 and 70.

Firefighters say the blaze has been extinguished but crews are monitoring in case of any flare ups, with investigators on scene ready to begin looking for the source of the fire.

It appears the fire started in one unit, spread up into the roof, through the roof and to adjoining top floor units.

The 20-unit building is badly damaged and its roof has partially collapsed.