1101 GMT February 28, 2020
The fire started on Friday in Dhaka's Mirpur neighborhood and destroyed about 2,000 mostly tin homes, fire services official Ershad Hossain told AFP news agency.
Several people were injured but nobody was killed in the fire, authorities said, Al Jazeera reported.
Most of the homes were empty as people had left to celebrate the Eid al-Adha holiday with their families.
"Otherwise, the damage would have been bigger," local police chief Golam Rabbani told AFP.
It took fire fighters hours to get the blaze under control and at least 10,000 people were forced to look for shelter in crammed camps at nearby schools.
"We are providing them with food, water, mobile toilets, and electricity supply," municipal official Shafiul Azam told AFP, adding that authorities were trying to find permanent accommodation.
Reporting from Dhaka, Al Jazeera's Tanvir Chowdhury said the fire was "absolutely devastating."
"Most of the people are trying to salvage whatever they can," he said. "Many of them had been living here for 20 years. A lot of these people work in the garment factories, some are rickshaw pullers, some people are day laborers whose life savings were in the shanty homes where they lived."
An investigation has been launched into the cause of the blaze.
Fire disasters have regularly hit Bangladesh's major cities, killing hundreds of people in recent years.
Critics have blamed lax regulations and poor enforcement for the deadly blazes.
At least 100 people have been killed so far this year in building fires across the densely populated metropolitan city.
In February, more than 70 people were killed a massive fire raced through several apartment buildings also used as chemical warehouses.
A month later, 26 people were killed after a fire broke out in a high-rise office building in Dhaka, leading to the arrest of two owners for negligence and violations of a national building code
A June 2010 fire in the nearby neighborhood of Nimtoli, one of the most densely populated districts of the capital, killed 123 people.
In November 2012, a fire swept through a nine-storey garment factory near Dhaka killing 111 workers. An investigation found it was caused by sabotage and that managers at the plant had prevented victims from escaping.