Most of Oldham town centre in Greater Manchester was evacuated because of a gas leak during tram extension work.
Workers were demolishing the Baptist church in King Street when there was a small fire caused by one of them cutting into a gas pipe.
Hundreds of people were told to leave their homes and businesses at 1230 BST. Oldham Sixth Form College has also been evacuated.
The cordon has now been lifted, police said.
Father Phil Sumner, of St Patrick Church, said there was "chaos on the streets".
"It has been horrendous - just walking up to the civic centre at a quarter-to-one there were people everywhere and no-one seemed to know where they were going."
Greater Manchester Public Transport Executive (GMPTE), which said a contracted firm had been working at the site before the leak, said an investigation was taking place.
A fire service spokesman said crews were called out to reports of a small fire at the site, which was out when they arrived.
Manchester Road, Union Street, George Street and King Street were among the main roads affected.