Visibility in Palembang, the capital of South Sumatra province, was at about 1,000 meters (0.62 miles) on Wednesday morning, said meteorology official, Suyatim.
The haze forced Palembang residents to wear handkerchiefs while going out, the state Antara news agency reported.
"The smoke is quite bothersome because it causes eye irritation and shortness of breath especially during the afternoon and evening," Antara quoted a resident as saying.
Suyatim said worst-hit was the Ogan Komering Ilir district, some 80 kilometers (49 miles) southwest of Palembang, where early morning visibility had been a mere 20 meters on Monday.
He said a satellite image on Tuesday indicated there were 800 fires in the province, with people in the Ogan Komering Ilir area in particular burning vegetation to clear their land ahead of the planting season, a practice that has been outlawed.
"As usual, the haze is caused by illegal land-clearing and people setting fire to dried wild brushes," Suyatim said.
Sumatra and Kalimantan, the Indonesian part of Borneo, are the areas usually hardest hit by the haze, an annual dry-season hazard in parts of Southeast Asia.