Wabush mayor Ron Barron said Sunday that provincial authorities described the fire as posing a "low threat" to the town of 1,800 and allowed residents to return home.
The main reason for Friday's evacuation was thick smoke in the community that created air quality concerns, but weather conditions are solving that problem said Barron.
”Weather people are telling the Department (of Natural Resources) for the next three to five days they’re going to have pretty high winds but their westerly winds that are going to take smoke away from the home,” he said in an interview Sunday night.
However a state of emergency remains in force and residents might have to leave their homes again "at a moment's notice," Barron said.
“Even though the fire is pretty well contained close to the community and there is still thousands of hotspots in the area and with the dry area it could flare up again.”
The province's fire duty officer Eric Earle agreed, emphasizing that Sunday's lowered threat level may change in the coming days depending on weather conditions in the area.
Meanwhile, officials were able to ramp up their fight against the flames Sunday after recent rainfall allowed ground crews to be deployed to a section of the Trans-Labrador Highway east of Wabush.
"It's an important area," Earle told The Canadian Press.
"If they are successful we will probably be able to provide escorts for traffic to get through that area for short time periods."
Three helicopters were assisting the approximately 30 firefighters in action along the highway.
Four water bombers were also involved in the offensive, two of which were focused on the western flank of the blaze burning about four kilometres from Wabush.
"We've been successful in the last few days in preventing that perimeter and that particular section from advancing towards the town," said Earle, who was speaking on behalf of the Department of Natural Resources.
"Right now that's one of our priority zones. That's where we've focused on the majority of our aerial suppression."
The fire has spread slightly since Saturday but growth was concentrated in the north and east, away from Wabush in the west.
The water bombers involved in fighting the Labrador fire — referred to as skimmers — operate by skimming the surface of a water source, filling their 4,500-litre tanks in a matter of seconds, before unloading over priority areas.
The water bombers were using Wabush's reservoir and Barron says residents are not allowed to consume the water until tests confirm there was no contamination.
Although temperatures were expected to increase Sunday afternoon, winds were expected to come out of the west, which Earle said would help with smoke management.
The fire has consumed about 70 square kilometres since last Sunday.
— by Geordon Omand in Halifax