UPDATE, 7.40PM: The family has been left with nothing but the clothes on their backs after the fire destroyed their home and killed their three pets.
Mother-of-two Heather Stinton returned from picking her daughter up to find the house burnt to the ground with the family’s two cats and dogs inside.
The house on Houlahan Street, where Ms Stinton lived with her partner Simon Murray and two daughters, was not insured.
Family friend Mel said they are “in shock at the moment”.
“They have lost everything,” she said.
“They didn’t have any insurance and they lost the animals as well as all the children’s Christmas presents.
“All they have is themselves and the clothes on their backs.
“They have got nothing left.
“Heather left to pick up her daughter and when she came home an hour later the house was burnt.”
UPDATE, 2.55PM: Bendigo senior fire station officer Greg Stead addressed the media at the scene, saying he believed a woman and a child lived at the house.
"It's obviously devastating for the family who live here," he said.
"The house is extensively damaged.
"The side of the house has substantial fire damage but there is smoke and heat damage throughout the property.
"If you have Christmas lights you get out only once a year, check the leads regularly and always turn any electrical appliances off when you are not home because it has (leaving Christmas lights on) had a devastating effect here today."
UPDATE: The blaze has destroyed the house and is believed to have been started by Christmas lights that were left on, Bendigo fire station officer Greg Stead said.
"This is a timely reminder to turn off electrical appliances when you are not at home," he said.
Mr Stead believed a woman and a child lived in the property.
"The fire began in the lounge room of the brick house," he said.
"It took 15 minutes to get the fire under control.
"The fire did not damage any neighbouring properties."
EARLIER: The fire appears to be under control.
Police have cordoned off the house and a neighbour's house with police tape
Ambulance Victoria is attending to female neighbour suffering from breathing difficulties due to smoke inhalation.
Sergeant Mick McCrann said police would deliver a statement to the media shortly.
Police, three CFA trucks and one ambulance remain at the scene.
FIREFIGHTERS are battling a house fire in Houlahan Street, Flora Hill.
Traffic is being diverted from the street.
Flames are coming from a back room in the house and police are on scene.
It is believed no one was in the house when the fire started.
Neighbouring houses have been evacuated.