Syed said firefighters had managed to bring the blaze under control.
“Many families have been affected. Now it is a matter of getting people housed at another location.”
The organisation started a relief drive to collect food, blankets and clothing for residents whose belongings were destroyed.
Sydenham community policing forum spokesman Satish Dhupelia said a fire had also broken out at another nearby informal settlement a few days ago.
“That blaze was put out quickly by firefighters. The problem is that residents are living in cramped conditions. Their homes are made out of wood and other flammable material which burns quickly. That's the danger they face.
“They are in dire need of proper housing,” he said.