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More than 100 fires have killed one man and destroyed more than 200 homes in New South Wales state since Thursday.
Fire investigators found that a massive fire near the city of Lithgow, west of Sydney, began Oct. 16 at a nearby Defense Department training area, and that the blaze "was started as a result of live ordnance exercises" at the army range, the Rural Fire Service said in a statement.
The fire has burned 180 square miles and destroyed several houses, but no injuries or deaths have been reported in the blaze. It was downgraded from the highest emergency category on Wednesday.
The Defense Department declined to comment on the investigators' findings, but had earlier confirmed that an explosive ordnance training exercise was conducted Oct. 16. The Defense Department was also investigating any link between the exercise and the fire.
The revelation drew anger from Mark Greenhill, mayor of the community of Blue Mountains, which has been ravaged by several of the fires over the past week.
"I would have hoped on a day like that — which was a dry day, a hot day, with the winds — the Australian military would have known it wouldn't be a good time to be igniting," Greenhill told the Australian Broadcasting Corp.
New South Wales Premier Barry O'Farrell came to the military's defense.
"I want to ensure that this doesn't detract from the efforts that Defense have made over the past week in assisting the state's emergency services battle these fires," he told the Seven Network.
Meanwhile, winds that were fanning wildfires and showering embers on threatened communities eased late Wednesday, after scores of Blue Mountains residents evacuated their homes.
Residents were told they could return to their homes Wednesday night, as cool weather settled across the region and fears lifted that the fires could spread and threaten homes. There were no reports of property loss or injuries on Wednesday.
While many hours of firefighting are still to come, "the broader risk to a much larger, more widespread population has certainly eased," Rural Fire Service commissioner Shane Fitzsimmons said.