Beachgoers saw a "massive fire" spread quickly up East Cliff on Bournemouth beach at about 15:30 BST on Saturday.
Pictures posted on social media showed yellow smoke rising from the undergrowth, apparently before the fire took hold.
A police spokesman declined to comment on reports that two youths had thrown a flare into the bushes.
Bournemouth Council said its seafront rangers guided beachgoers away from danger and ensured the area was clear.
Dorset Police said no injuries had been reported.
Bournemouth East MP Tobias Ellwood posted on Twitter: "Huge praise for Bournemouth's Emergency Services in responding to major grass fire that spread rapidly on East Cliff cliff top above packed beach."
Eyewitnesses say a gorse fire which led to a packed beach being evacuated may have been started by a flare.