SANTA FE, New Mexico (Reuters) - Firefighters battling New Mexico's largest-ever blaze gained ground on Sunday and officials said they would begin to allow evacuated residents to return home on Monday.

The Whitewater-Baldy Complex fire, which has burned 241,701 acres in the Gila National Forest, is now 17 percent contained with progress being made by the hour, said Fire Information Officer Heather O'Hanlon.

Residents of the historic mining town of Mogollon, which was evacuated last Saturday, will be allowed to return starting on Monday, she said.

O'Hanlon said the fire had slowed considerably now that it was headed to shallower terrain and was encroaching on stands of a different type of tree, moving on from mixed conifer to pinon. She said officials were hoping to have a much larger containment number by Monday.

"I think you're going to see a pretty significant change in containment tomorrow," O'Hanlon said.

The blaze, sparked by lightning on May 16, has been burning in deep, rugged canyons, consuming Ponderosa pine and mixed conifer.

Because of the extreme terrain, firefighters have been dropped from helicopters into remote mountain areas.

More than 1,200 personnel remain fighting the fire, including 14 elite so-called hotshot crews.