Fire and Rescue NSW (FRNSW) crews have contained a blaze in Port Stephens this morning after a garage exploded into flames and set fire to an adjoining house.

Just before 3.30am, firefighters arrived at the scene at Bottlenose Street, Corlette to find the residents had escaped the burning home.

The owner was awoken by a large bang and discovered the garage alight. It contained a large amount of flammable material and flames were visible through the roof.

The flames and extreme heat, generated by those contents, spread to the adjoining house.

Crews from FRNSW contained the blaze but the house was severely damaged by fire.

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