Meanwhile in mainland Portugal, where 13 major wildfires were raging out of control, a forest watchman was also killed during the night when a blaze engulfed the caravan he was sleeping in 150 kilometers (95 miles) north of Lisbon.
Forest fires have been ravaging parts of Portugal since last Saturday, when strong winds and high temperatures swept across the country, and have stretched resources to the limit.
Miguel Albuquerque, head of Madeira's regional government, told reporters the three victims there died in their burned homes early Wednesday as the wildfire hit the coastal city in the dark. He said two other people were seriously hurt, one person is missing and more than 300 people required medical treatment for smoke inhalation and minor burns.
He said 80 of the injured were still in the hospital. At least 37 houses and a five-star hotel had burned down.
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Tourism is the mainstay of Madeira's economy. The high winds in recent days have also forced the cancellation of around two dozen flights.
The blaze broke out on Monday and firefighters said the island's steep hills and dense woodland made it hard to reach the flames. Albuquerque said officials suspect the fire was started deliberately and police have made two arrests.