However, there were no casualties reported in the incident, said fire officials.
According to Delhi Fire Service, the fire was reported around 2 AM and as many as 28 fire tenders were rushed to the spot. The fire was doused around 7 AM, after which a cooling operation was launched.
The fire is believed to have originated from a plastic waste dump yard adjacent to the slum cluster at UT block in Mongolpuri, which is inhabited by around 300 families.
Inhabitants had evacuated the cluster but by the time fire tenders reached the spot, all houses and shops inside the cluster were gutted.
The police are investigating the matter, the official added.