Indonesia has revoked the licence of a timber supplier and suspended the operations of three palm oil plantation operators over fires that have blanketed Southeast Asia in haze, an official said Tuesday.

The illegal blazes in Indonesia have sent smog floating over the region in recent weeks, causing thousands to fall ill, worsening air quality and reducing visibility in the archipelago, as well as in neighbouring Singapore and Malaysia.

The fires, mostly started to clear land for palm oil and pulp and paper plantations on Sumatra and Borneo islands, are an annual occurrence. But President Joko Widodo has insisted this year that law-breakers will be punished.

The environment ministry on Monday decided to revoke the licence of Indonesian wood supplier Hutani Sola Lestari, based on the western island of Sumatra which is at the centre of the haze outbreak, ministry spokesman Eka W. Sugiri told AFP.

It also suspended operations of three Indonesian companies that operate palm oil plantations on Sumatra, the spokesman said. Palm oil is an ingredient in many everyday goods, such as biscuits and shampoo, and high global demand has been blamed for fuelling deforestation in Indonesia.

"Our team has learned fires have been spotted in these companies' concession areas and that they have contributed to the haze disaster," Sugiri said, adding the timber supplier was deemed to be the worst offender.

AFP sought comment from the companies but none could be contacted.

The wood supplier will no longer be allowed to operate, while the three other companies must cease operations until legal action against them has been completed, Sugiri said, adding more companies would likely have their licences suspended.

Police have in the past week launched investigations into several companies and arrested executives, while more than 170 individuals are also being probed over the fires.

Air quality on the Indonesian part of Borneo island worsened Tuesday, hitting hazardous levels in some areas, although it was improving on Sumatra.

Smog also clouded the skyline in Singapore, with the acrid smell of burning wood and foliage creeping into offices and homes and some people wearing masks.

Parts of Malaysian Borneo, a vast island shared by Malaysia, Indonesia and Brunei, also registered "unhealthy" air quality.