The RFS has downgraded the fire to a Watch and Act warning Yearinan Station Rd, Bugaldie, which is in the Warrumbungle council area.
The RFS said crews are gaining the upper hand on the fire and residents in the area of Dandry Rd, Tandarra and Galaxy Estate are urged to monitor the conditions.
The Newell Hwy is still closed between Coonabarabran and Narrabri.
The RMS said the Newell Highway has reopened after being closed due to the bushfire at Coonabarabran.
The highway was closed in both directions between Narrabri and Coonabarabran.
Diversions have been lifted, but motorists are still advised to take care through the area.
NSW RFS commissioner Shane Fitzsimmons said the advice for locals to seek shelter "was all about safety".
"The advice is not for the township of Coonabarabran itself, but for a few kilometres out to the north east of Coonabarabran, out towards the Newell Highway area, where it intersects with the Oxley Highway," Mr Fitzsimmons said.
"It [the fire] is actually crossing one of the local roads there and heading back towards the Newell Highway.
"Properties and people in that area - that's where the alert message has been issued for sheltering in place as the fire approaches."
The Newell Highway is closed between Narrabri and Coonabarabran due to a bushfire burning on Yearinan Station Road, Bugaldie.
Motorists are advised to avoid the area.
Motorists who need to travel can use the Oxley Highway and Kamilaroi Highway via Gunnedah instead, and should allow plenty of extra travel time.
Motorists already travelling on the Newell Highway in this area are advised to follow the directions of emergency services.
The fire burning north of Coonabarabran on Yearinan Station Road, Bugaldie has been upgraded to a emergency warning level.
The NSW Rural Fire Service is advising people who are in the Dandry Roadd, Tandarra and Galaxy Estate areas are at risk.
The RFS advises people in those areas that it is too late to leave and that those affected should seek shelter as the fire approaches.
EMERGENCY WARNING - Yearinan Station Rd, Bugaldie (Warrumbungle LGA)— NSW RFS (@NSWRFS) January 10, 2020
A fire is spreading quickly NE of Coonabarabran. If you are in Dandry Rd, Tandarra & Galaxy Estate, you are at risk. It is too late to leave. Seek shelter as the fire approaches. #nswrfs#nswfires#alertpic.twitter.com/s7JhDYiwEw
FIREFIGHTERS are working quickly to combat a blaze north of Coonabarabran.
Currently at a watch and act level, the fire on Yearinan Station Road, Bugaldie is burning in a south-westerly direction towards the Newell Highway.
The highway is currently open, but motorists are being advised the road may be closed at short notice.
The fire is one of 116 current fire-related incidents across the state.
Keep up to date with the latest bushfire updates from across the country with our live blog here.
So far, the fire has burnt 625 hectares of land.
Friday's blaze comes after crews attended an incident on Nullawa Road in Tambar Springs on Thursday.
The incident was deemed under control by Thursday afternoon.
Residents are being urged to monitor the NSW Rural Fire Service (RFS) website and the Fires Near Me app.
Motorists are urged to monitor the Live Traffic NSW website for live traffic conditions.