Dramatic footage has emerged of the moment two backpackers were caught in a fireball when a lithium-ion battery exploded in a hostel in inner-Sydney.

The fire, shortly after 9am on Wednesday, is believed to have been sparked by a faulty e-bike battery left on charge at the Darlinghurst hostel.

Security footage from a hallway shows one of the French backpackers standing at the doorway and talking to his friend, who was still inside the room.

The device suddenly explodes into flames, sending both men fleeing.

They went to the nearby Kings Cross Police Station to seek assistance.

Fire and Rescue sent six trucks and 22 firefighters to the two-storey Mad Monkey Downtown Backpackers in Darlinghurst Road.

Another 70 people were evacuated from the building, while surrounding streets were closed to allow firefighters to douse the blaze.

“All of a sudden smoke started to get into the room. It was, like, a really stinky smell, really bad smell,” one hostel guest who fled the fire said.

Another said he had raced for the exit with just his passport and laptop.

Crews managed to contain damage to the one unit before extinguishing the fire a short time later.

One of the men, aged in his 20s, sustained minor burns to his leg. He was taken to St Vincent’s Hospital for further treatment.

Experts from FRNSW’s fire investigation and research unit are working with NSW Police to investigate the circumstances surrounding the incident. However, a faulty lithium-ion battery is believed to be the cause.

See this FRNSW information on safety battery handling.