Thick black smoke was seen billowing across the capital's skyline from the 12-storey hotel in William Street, Knightsbridge, where a presidential suite costs £6,000-a-night.
More than 100 firefighters and 20 fire engines were dispatched to the fiery scene and police cordoned off the surrounding roads as passers-by gawked at the smoke.
The hotel and nearby buildings were evacuated and there are no reports of any injuries. The cause of the fire is yet to be established.
The Hong Kong-owned hotel recently finished the most extensive and costly refurbishment in its 115-year history, with rooms only re-opening to the public last Tuesday.
Williams, 44, was staying at the hotel ahead of charity football match Soccer Aid 2018, which kicks off in Manchester on Sunday when he got caught up in the blaze.
In dramatic footage shared by a fellow hotel guest on social media, the singer is seen dashing down the fire escape before giving a thumbs up outside.The London Fire Brigade confirmed no one was trapped or injured in the fire.
The London Ambulance Service also confirmed there were no patients treated but continue to remain at the scene as a precaution.
A spokesman for the exclusive Hong Kong-based hotel chain told MailOnline: 'We are aware that there is a fire at Mandarin Oriental Hyde Park, London, and that the fire brigade is at the hotel.'
A fire brigade spokesman added: 'The Brigade's 999 control officers [took] more than 35 calls to the fire, which [produced] a lot of smoke.
'The Brigade was called at 15.55. Fire crews from Chelsea, Kensington, Hammersmith, Battersea and other surrounding fire stations are at the scene.
'The cause of the fire is not known at this stage.' Williams was one of the hundreds of people evacuated from the hotel during the fire.
The Angels singer, who lives in Los Angeles, arrived in London earlier this week ahead the Soccer Aid 2018 tournament due to take place on Sunday.
The former Take That star set up the charity event with Jonathan Wilkes in 2006.
Williams will be captain of England's team this year as they take on the rest of the world at Manchester United's Old Trafford ground.
Dressed in a bright blue Unicef hoodie this afternoon, the star appeared calm despite the hectic situation as he made his escape down the 12 flights of stairs outside the hotel.
In a video posted to social media, he reached the end of the stairs surrounded by his team when the camera panned back to the roof of the luxurious hotel which was engulfed in thick black smoke.
Instagram user Nicholas Hardwick was also fleeing the fire at the same time as Williams and caught the moment on camera.
Australian singer and actress Holly Valance was nearby when the flames broke out.
The 35-year-old tweeted: 'This is just terrible #mandarinoriental just minutes ago. Went up in seconds!' A tradesman working at the hotel said he saw a fire on the roof before raising the alarm.
The 19-year-old lift engineer, who gave his name as Harry, said: 'I was in the lift and I hit the fire alarm button.
'I was in the lift shaft and I looked to my left and saw the geezers working on the roof.
'To my left there was a big fire.
'I said (to my colleague) ''Lee, there's a fire over there, let's get out of the building. Get out the lift shaft, I'm being serious''.
'We ran down the stairs and went and got the scaffolder out of the loading bay.'
He said the builders on the roof had been cutting materials and doing other work during the day.
Staff at the hotel were evacuated to Hyde Park where they were given bottles of water.One worker, who asked not to be named, said: 'The fire alarm started and everybody was told to get outside.
'Everything's fine but we don't know how it started yet.'
Jack, 19, a student told MailOnline: 'I came out of Knightbridge Station when I saw a huge amount of black smoke.
'The fire brigade have cordoned off the street and the customers from the surrounding shops have been evacuated.'
Jack Martin, a 21-year-old student from Peckham, said he was coming out of Knightsbridge station when he saw a 'huge billow of smoke'.
He said: 'I obviously was quite shocked when I saw all that smoke.
'But they were evacuating the building when I arrived, there were a fair amount of staff and guests and it was all fairly orderly.
'It was all quite calm and collected, there wasn't any hysteria and I thought it was well organised.'
He added: 'I would say the fire is under control now. I can't see any smoke, there are firefighters and the whole building is dripping wet right now.'
Tourist Eric Bantug spoke of his shock at seeing a historic building on fire.
The 47-year-old financial services worker visiting from Las Vegas, USA said: 'I was just coming up from the Tube and smelled the fire. I could smell burning.
'When I got up above ground I saw all the smoke coming out of the building. It's pretty old and it's a shame to see it happen.'
Penelope Evans, 50, from Battersea, south London, was shopping in Harrods when she noticed the thick smoke as she was leaving.'I saw all this black smoke coming from the sky, it was covering everything and the smell was horrendous.
'It was like people were in shock, everyone immediately just started leaving the street and the area.
'There were hundreds of fire engines, ambulances, police racing by and helicopters overhead.
'After Grenfell, I feel like people are a lot more on edge about these things, people just wanted to get out.'
A local businesswoman, who did not want to be named, said: 'The fire was in the middle of the Mandarin Oriental Hotel.
'There was a lot of smoke. I couldn't see anyone being evacuated but they had closed off the whole road.
'It's quite a lot of smoke, you could smell it.
'I could see a lot of fire engines and police cars and some ambulances as well.' Eyewitnesses posted videos of the flames on social media showing the large column of smoke rising from the top of the building and people in nearby Hyde Park turning their heads towards the sky.
One user called Arthur said: 'Looks really bad. Prayers to those inside.'
While another, Penelope Evans tweeted: 'My wishes to anyone is are hurt or effected by this.'
'There's quite a lot of debris on the street. I can still see a little hue of red from the roof.
'I didn't see anyone seem to be in too much distress - it's under control now, I hope.'
The fire comes just weeks after the luxurious hotel was back open for full business after an extensive and costly refurbishment.
The 115-year old establishment was modernised as part of a multi-million pound restoration, as its 118 rooms with views across London's Hyde Park were transformed.
The last fire known at the hotel was 119 years ago in 1899 when flames engulfed the top three floors.
The blaze was so destructive that the hotel was not re-opened until 1902 after a gruelling renovation.
Celebrity Chef Heston Blumenthal opened his first London restaurant, Dinner, at the hotel in January 2011. The critically-acclaimed 140-seat restaurant features a menu which dates back to the 16th century in a room that offers floor-to-ceiling plate glass windows offering views over Hyde Park.
Those seeking privacy can opt for a private dining room for up to 10 people, while those looking for the action of the kitchen can book the chef's table.
During the refurbishment, the façade of the hotel was covered by a collage of 100 of the famous people who are regulars at the hotel. The artwork has been completed by Sir Peter Blake, who created the legendary artwork for The Beatles Sgt Pepper's album.
Among those featured are Morgan Freeman, Helen Mirren, Christian Louboutin, Whoopi Goldberg and Dame Maggie Smith.
The artwork was the size of 38 double decker buses.
Throughout its history, the hotel has been a regular haunt of the Royal family, with Queen Mary attending several balls there, along with Edward VIII.
Queen Elizabeth II and her sister Princess Margaret first learned to dance at the hotel, while Prince Philip used the venue to host cocktail parties.
The great ballroom was the venue for Margaret Thatcher's 80th birthday.
The hotel was originally built as a Gentleman's Club in 1889, however, the top three floors of the building was destroyed in a fire that same year.
The Mandarin Oriental Hyde Park in London has just completed its most extensive restoration in its 115-year history.
As a result of the refurbishment, guests staying at the hotel in June and July were offered a deal for £695 a night - including breakfast and a bottle of champagne on arrival.
The Mandarin Oriental Hotel reopened this month following a massive refurbishment which saw each of the 181 rooms and suites altered by internationally renowned designer Joyce Wang, featuring custom-designed furniture and curated art works
The 181 rooms and suites were created by the internationally renowned designer Joyce Wang - featuring custom-designed furniture and curated art works.
Following its relaunch, the hotel offers rooms from 47 square metres located within the hotel's turrets to the 397 square metre Mandarin Oriental Penthouse - which has three bedrooms. The Penthouse was due to launch in July and was set to offer views over Hyde Park and the London skyline.
Guests were offered GHD hair straighteners in every room.
