A 41-year-old woman has been arrested over a deadly blaze that killed eight people in Paris and police are treating the fire as a possible arson attack, a prosecutor said Tuesday.

Speaking at the scene, Paris prosecutor Remy Heitz said that a woman who lived in the building in rue Erlanger in the wealthy 16th district had been detained by police.

“One person has been arrested. It's a woman. She's currently in custody,” Heitz said.

An investigation has been opened into the criminal charge of causing death by arson.

According to reports the arrested woman lived in the building and told police that she had had a dispute with a neighbour. This theory was backed up by one the deputy mayors of Paris Emmanuel Grégoire, who spoke of a “quarrel between neighbours”.

“We will let the police give additional information, but this is one of the theories being explored by investigators,” said Grégoire.

The mayor of the 16th arrondissement Daniele Giazzi said witnesses had reported hearing a row between neighbours in the block before the fire broke out.

“At first we thought it was a fight, we could hear a woman screaming really loud,” a local resident who gave his name as Nicolas told AFP.

“She was screaming, screaming and we went outside and the building was already on fire. The firemen had just arrived but what was amazing was that they were completely impotent.

“They had the trucks, the big ladders, but they couldn't do anything,” he explained.

The suspect is believed to have been arrested at around 1am, shortly after the blaze broke out.

She was witnessed trying to set fire to a vehicle in the street and threw a burning t-shirt into one of the refuse bins outside the apartment block.

Reports in the French press described the suspect as being mentally unstable at the time of arrest.

The Paris prosecutor confirmed that she had a history of psychiatric illness and said she was known to authorities.

The fire service had previously said that seven people had died, but that the toll rose to eight later on Tuesday morning.