Chilean President Michelle Bachalet has declared a state of emergency in Valparaiso as a 2-day-old fire continued to ravage the city, killing at least 12 people. Some 2,000 homes have been gutted to the ground. The fires have forced at least 10,000 to flee and evacuate.

"This could be the worst fire in the city's history," Ms Bachalet told reporters late Sunday. "The people of Valparaiso have courage, have strength and they aren't alone," she added.

Firefighters initially thought they would be able to control the flames, but Sunday afternoon's winds prevented them, injuring 500 others.

"The fire raced down the hills and destroyed everything in its path," Miguel Ramirez, a local resident, said.

Twenty helicopters and planes were mobilised to help drop water on hotspots. Chile's national emergency office, however, said it would take some time before the flames are controlled and finally put out.

"This won't be extinguished, not today nor tomorrow," the office tweeted after issuing a new alert when fires kicked up again Sunday afternoon.

A city of 270,000 people, Valparaiso is a UNESCO-listed centre known for its cobblestone streets and brightly painted wooden homes.

"We are in what remains an emergency situation ... and it is a complicated situation," Defence Minister Jorge Burgos told Radio Cooperativa on Sunday.

The cause of the fires continue under investigation.

"Families have not only lost their homes and their possessions, but also their family memories," Ms Bachalet said.

Authorities said the death toll could rise once the fires have been put out and the temperature already cool enough to search for bodies amid the rubble.

Resident Monica Vergara expressed gratitude all her children are safe despite losing everything.

"I heard a huge explosion and it felt like our house lifted up. A fireman evacuated us," she told AFP. "I've lost everything, but my four children are safe and that's all that matters."