No deaths have been reported, although several people were injured, authorities said.
It said numerous estimated 50,000 people who lived in the slum were low-wage earners, who were away from their homes because of a Muslim religious festival.
Nearly all the shanty structures numbering above 2500 were completely gutted in the fire. Md Habibur Rahman, Director of the Fire Service, said the committee led by a Deputy Director was formed to find out the cause behind the fire incident.
Fires in Bangladeshi slums where hundreds of thousands of people are crammed in shacks along rail and waterways s are common.
Meanwhile, firefighters were conducting a search operation at the slum since this morning.
No casualties have been reported so far.
"Most of the people are trying to salvage whatever they can", he said.
Many of them suffered minor burn injuries while escaping the fire last night. A pall of gloom descended upon the residents as they lost all their valuables in the fire.
Slum dwellers said that at 7:15pm, they suddenly noticed bellowing smoke and fire in the midst of the slum that spans over 30 bighas of land beside the Milkvita Road in Mirpur 7 neighborhood.
Numerous dwellers were seen coming to the site in the morning to find anything sellable out of the ruin for buying daily necessities.
Meanwhile, locals allege that the slum dwellers had illegal gas connection through plastic pipes instead of the metal ones for which fire spread rapidly in the area.
Electricity connection was disconnected in the area immediately after the slum caught fire. The reason for the fire is not known.
A total of 20 fire units battled hard for about three hours to bring the fire under control at about 10:35 p.m. local time on Friday evening, Fire Service control room official Mahmud Hasan told Xinhua.
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