POLICE are hunting a serial arsonist who may have a grudge against wheelie bins after 8,500 of them were destroyed in an inferno.

The attack yesterday at Priddy's Hard in Gosport came less than a week after a firebug set alight 2,000 bins causing £34,000 of damage.

Fire investigators are still examining the scene but police have confirmed that they believe the blaze at the listed building was arson.

The blaze began at around 5.30am yesterday sending a plume of black smoke into the sky.

It could be seen by motorists on the M27 and people on the other side of Portsmouth Harbour and as far away as the Isle of Wight.

By 9.45am firefighters had it under control. Officers from Gosport CID are investigating both blazes. A police spokesman said: "We are treating this as arson."

Leader of Gosport Council Mark Hook said: "I have an open mind about who is doing this. I think that they are probably just arsonists and are not just targeting wheelie bins.

"That particular site has had something like 12 buildings burnt down in the last year. There has been a lot of trouble.

"The building is just devastated. It's in three parts and at least two thirds of it will have to be pulled down fairly soon for health and safety reasons."

Council chiefs are today counting the cost of the devastating fire. It is likely to cost about £144,500 to replace the bins at £17 apiece that were due to be rolled out as part of the final stages of a recycling scheme.

The cost of damage to the building, which was totally destroyed, is still being assessed.

It is hoped the council's insurance will cover it. A spokesman for Gosport Council said: "The bins were due to be sent to Lee-on-the-Solent and parts of Rowner.

"Despite the fire there is no question mark hanging over the scheme and we hope to get new bins to meet government set targets very soon."

Next door the award-winning Explosion! Naval Museum amazingly escaped damage after firefighters protected it with jets of water. Its doors remained closed yesterday as a tricky clean-up operation swang into action.

Chris Henry, curator at the museum said: "This is devastating news for the heritage site.

"However, I am relieved that the museums historic buildings and the unique collection of naval weapons and documents have been untouched."

The museum was due to reopen today.

Bill Sainsbury, the council's business services manager said: "When we first heard the news, we were initially concerned for the museum's archive collection and put in place emergency evacuation procedures.

"However, the fire took a different course and the museums document collection was safe."