Investigators said on Tuesday that the fire that burned a two-storey house in Newport, Melbourne may have been caused by the house occupant who probably smoked in bed.

The fire broke on Monday night at the top floor of the house and caused the female occupant's death. Firefighters discovered the still unidentified woman's body on her bed, although they initially thought she fled her house.

Commander Frank Besanko cited neighbours' stories that the victim, who was middle-aged, was a heavy smoker, 9 News reports.

Firefighters received a call about a fire on Liley Street at about 8:30 p.m. and were on the scene within four minutes. It took them 30 minutes to battle the blaze and prevent it from spreading further to other units of the townhouse block.

Investigators estimate the damage at about $250,000.