The two Thompson Draw subdivisions were evacuated midday Wednesday, said Emily Garber, a spokeswoman for the crew fighting the fire.
Garber said fire crews felt good about the progress they had made early in the day but expected Wednesday evening to be critical.
``We're actually feeling pretty good about things,'' Garber said late Wednesday afternoon. ``We hit it pretty hard.''
More than 80 homes are in the area but it wasn't clear how many people had to evacuate since some of the houses are seasonal and not all were occupied, said Ron Christensen, vice chairman of the Gila County Board of Supervisors.
School buses were also evacuating 136 children from a nearby church camp and taking them to a shelter established at a Payson church, Christensen said.
``It's a scary situation for a lot of people because they haven't done this before,'' he said. ``The smoke clouds are very intimidating to be looking at and make it very hard to tell how far the actual fire is.''
An evacuation center for residents was set up by the Red Cross at Rim Country Middle School.
Pre-evacuation notices were issued in the Christopher Creek, Kohl's Ranch and Bear Flat communities. There are 155 homes in Kohl's Ranch and about 100 in Bear Flat, Christensen said.
Officials were also concerned about the fire's proximity to Tonto Village and an Arizona Public Service Co. utility line, Garber said.
The fire appeared, however, to be moving away from the electric transmission system, said Damon Gross, an APS spokesman. The blaze was one to two miles from the transmission line.
Vonda Lux, who lives with her family in a subdivision west of the fire, said she could see a large plume of gray smoke.
``It's bad. It looks like something out of a picture,'' she said. ``Right now, I'm pretty nervous. I sure hope they get a handle on it.''
The fire, first reported by a Forest Service lookout midday Wednesday, forced the closure of Highway 260 between Star Valley, directly east of Payson, and Heber, 40 miles away.
It was burning primarily in ponderosa pine trees and was largely wind-driven, Garber said.
Fire officials immediately put five large air tankers on the blaze and four smaller ones. The fire had spotted north of the highway, but Garber said crews were able to catch those spots and keep the fire south of Highway 260.
