The facility is operated by the Swedish Migration Board (Migrationsverket) and is located at Gamla Nalles motel in Arboga in central Sweden.
The fire broke out in the facility’s restaurant.
Fire crews received a call about the fire around 3.40am, but by the time they arrived, the blaze had ravaged much of the building.
“The restaurant area is completely engulfed,” firefigher Conny Larsson told the Aftonbladet newspaper.
Around 80 refugees housed at the facility have been evacuated. Three people were taken to hospital with smoke-related injuries, but it remains unclear how serious their injuries are.
By Tuesday morning, the fire had been brought under control and police are now waiting for the flames to be completely extinguished before launching a forensic investigation.
“It’s a pretty large, long building. The restaurant area was burned quite significantly,” Västmanland police spokesperson Terje Lund told the TT news agency.
The evacuees were taken to a parish house run in Arboga by the Church of Sweden where they were met by members of the municipality’s crisis group.
The cause of the fire remains unknown.