Nine passengers have jumped from a hot air balloon hovering over Melbourne’s Port Phillip Bay onto a police boat below following fears the balloon, which was low on fuel, would ditch into the water.

While the drama unfolded over the bay, a second hot air balloon crashed into a suburban street in nearby Aspendale Gardens.

The balloon at Port Phillip Bay was hovering about 500 metres offshore around Black Rock and low on fuel, the Metropolitan Fire Brigade (MFB) said.

Fireboat crews and water police travelled to the scene about 8:30am, while a number of nearby fishing boats trailed the balloon.

The balloon floated over the police boat and each time it began to lose altitude, passengers climbed out of the basket and jumped onto the deck below.

The passengers were taken to the Beaumaris motor yacht squadron to be checked by paramedics.

The loss of passengers reduced the weight of the basket, allowing the pilot to return to shore. The balloon then landed at Mount Martha.

In the second incident, a hot air balloon crashed into the front yard of a house in Aspendale Gardens.

Resident Cheyne Chalmers said she woke to a loud burner noise and looked out the window to see the balloon in the street.

She said it may have been on its way to Moorabbin Airport.