Roof fire engulfs Katoomba RSL Club

Police have been called in following concerns memorabilia inside an RSL club engulfed by fire in the NSW Blue Mountains could include live ammunition.

However authorities say the move is just a precaution, with the Katoomba blaze mostly extinguished on Friday night except for a couple of "hot spots".

"The fire's not near it, so there's not any danger of it; they were just a bit worried," a Fire and Rescue spokesman told AAP.

The venue has been severely damaged by the blaze, which is believed to have started in the roof about 1.30pm on Friday.

Emergency services were on scene in minutes but hours later the fire had engulfed at least half the building and the roof had collapsed.

There were no injuries, with 40 people evacuated from the club safely.

The force of the blaze blew out several windows and flames burst from the side and roof of the building, witness Josh Morris told AAP.

At one point, firefighters successfully battled to save a neighbouring house under threat.

They tried to salvage the club's war memorabilia but it wasn't clear if any had been destroyed, the Fire and Rescue spokesman said.