Fifteen fire engines and around 100 firefighters tackled a fire at a recycling centre on Amenity Way in Morden.
A pile of rubbish measuring 20 metres by five metres was alight. Part of the storage unit was also damaged by fire. There were no reports of any injuries.
Station Commander Scott Thorpe, who was at the scene, he said: "Crews worked tirelessly throughout the night in extremely hot conditions to bring this fire under control. They remained on scene throughout the day extinguishing any hotspots."
Around 50 people were evacuated from neighbouring properties as a precaution. People were also advised to keep windows and doors closed due to significant amounts of smoke being produced from the fire. The Brigade's scientific advisor was on scene working to monitor air quality in the area.
The fire has been recorded as accidental and the most probable cause is a lithium battery that ignited within the waste.
A London Fire Brigade spokesperson said: "Lithium-ion battery fires are a major risk. We’ve seen a growing number of fires at waste disposal sites that are believed to have been caused by a lithium battery.
"Although lithium-ion battery products that have been built to a poor standard are a higher fire risk, any battery is at risk of exploding and catching fire if it has been crushed or becomes damaged. Lithium-ion battery fires can be ferocious and can spread in seconds. Fires that we attend at sites like recycling centres and scrap yards can be very time consuming for our firefighters and often require a high level of resources to put the fire out. We’ve also seen the detrimental environmental and societal impact these fires can have on local communities.
"Lithium batteries and electricals with hidden lithium-ion batteries should not be placed in the same bins as your regular rubbish or recycling. Instead, check with the retailer or your local authority's website for the safest way to dispose of lithium-ion batteries in your area and reduce the risk of fires occurring."
The Brigade was called at 0257 and the fire was under control by 0750. Fire crews from New Malden, Mitcham, Sutton, Wimbledon, Wallington, Surbiton, Norbury and surrounding fire stations attended the scene.