There are fears the blaze could spread to the city of Portimao, which is popular with British tourists and is nestled between the beach resorts of Praia da Luz, Lagos and Amacao de Pera.
The fire began five days ago in the eucalyptus and pine forests in the hills during an extreme heatwave.
The blaze is now steadily moving towards the coast where thousands of tourists, foreign and local, take their holidays every year.
Smoke was growing thicker on the coast and flames were closing in on the town of Silves, just six miles (10 km) inland.
It’s snowing ashes and the sky is yellowish, said Nuno Sarsfield Magalhaes, 43, who has an agricultural business in Silves.
The scene looks straight out of a science fiction movie because this colour is not normal, he added.
Residents fear the fire will spread to Portimao.
The wildfire has to travel a long distance to reach Portimao but the strong wind can speed up the process, said Meghann do Carmo, a South African living in the area.
People fear it might happen because the fire is worse than we thought.
Despite efforts to prevent a repeat of the deadliest fires in history last year, which saw the deaths of 114 people, authorities have been criticised over this latest fire.
So far there have been no deaths and villages in the path of the fire have been evacuated. About 30 people have been treated for smoke inhalation and burns.
The national commander and his team have taken control of the emergency services battling the huge fire in the southern Algarve.
We have decided to hand over the co-ordination of the operation to national level, directly managed by the national commander and his team, Interior Minister Eduardo Cabrita announced after an emergency meeting of the Civil Protection Service.
This will allow us to reinforce the mobilisation of resources.
By Tuesday afternoon, another 100 firefighters had been deployed, bringing the total to 1,320.
There were 420 fire engines and 17 aircraft involved.
Around 20,000 hectares have burnt so far since Friday.
News Source SkyNews