A man is being questioned by police over a Melbourne factory fire which killed three people.
The Arson and Explosives Squad is investigating the suspicious fire at an abandoned Melbourne factory, a day after new plans for the site were approved.
Three bodies were found shortly after firefighters extinguished the blaze in a rear room of an old Footscray ropeworks factory at just after midnight on Thursday.
They are believed to be squatters who had lived in the small room for months, if not years.
But police have not yet been able to identify names, ages or sexes of the deceased.
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"It's too early to tell," Detective Senior Sergeant Brad Nichols told reporters on Thursday.
He wouldn't elaborate on why police thought the fire was suspicious, but said it warranted further investigation.
"There was a fuel can located at the scene but we're not sure that is part of it or whether that was there before the fire," he said.
Witnesses heard screaming but were unable to help those trapped inside.
"I heard some screaming, but I was not sure who was screaming," a man who identified himself as Muhammad told reporters.
"I saw the front person was throwing water from the back, but the fire was so large they couldn't control it."
A man, 52, was arrested in the CBD on Thursday afternoon.
Locals say the squatters kept to themselves and had been known to lock themselves inside at night.
They say the squatters' presence had been linked to less vandalism at nearby Footscray City College.
"They were definitely getting settled in," local resident Rebecca told AAP on Thursday.
"It's very sad because you don't want people to die like that," Footscray man Phillip O'Connor said.
The squatters alcove was packed with furniture, clothes, plants, a bike, and locals said a chicken also lived there.
The local council says it had been aware of the squatters for six months and had informed them of local homelessness services recently.
The heritage-listed site between Ballarat Rd and Kinnear St was recently sold for $60 million and is set to be redeveloped.
Plans for 200 apartments were approved on Tuesday night, Maribyrnong Mayor Catherine Cumming told reporters on Thursday.
She showed reporters an artist's impression of the redevelopment.
She said her thoughts went out to the friends and family of the victims who were tragically killed.
"This is a powerful reminder of the ongoing issue of homelessness in our city and indeed across the nation," she said.
Site owners R & F Estate was "saddened and distressed" about the loss of life.
"R & F is co-operating with emergency services and other authorities to identify the background to the tragedy and any measures required on the site," a spokesman said.
