A woman has been taken to hospital for observation after a hot air balloon caught fire while flying through the Yarra Valley, east of Melbourne.

The balloon landed in a paddock near Cahillton Road, Gruyere, around 6.15am, police said.

A 27-year-old woman was taken to hospital for observation.

None of the 11 other people on board were injured.

Six crews from the Country Fire Authority attended the scene, where the charred remains of the balloon’s basket sits in a patch of burnt-out grass.

The cause of the fire is yet to be determined, and fire investigators have been on site.

The balloon is branded with the name of an Alice Springs-based company, Outback Ballooning.

The company said it did not operate in Victoria and was not aware of how a balloon with its name was in the area.

Last week, a hot air balloon carrying three couples who got engaged while in the air was blown off course and caught in trees while landing in Melbourne’s north-east.

-ABC