Close on the heels of a bomb threat, an explosion occurred at the Copper Tiffin Indian restaurant in the Cleveland St. in Surry Hills with four people being lucky to be alive after a resultant fire in a suspected arson attack overnight.

Police are investigating possible links to the bomb threat and last night’s explosion and fire..

Two people were seen running from the restaurant just after 11.30 pm as fire engulfed the building, witnesses told police.

Police claim that fire preceded the explosion that showered Cleveland Street with glass and debris. One witness said the shop front was missing.

Four occupants of a unit above the restaurant escaped. One person was taken to St Vincent’s Hospital with smoke inhalation, while another was treated by paramedics.

Shop fronts next to the damaged building have had their signage partially melted and paint blackened.

A nearby restaurant owner, who did not want to be named, said he heard a “loud explosion, like a bomb” just after 11.30pm.

The man said the explosion caused glass and signs to cover the road. He said the building was quick to catch fire.

“Then I see people climbing out of a window, about four. [It was] very lucky,” he said.

The witness said police had been at the same site “about two weeks ago” and cleared out several restaurants along the Cleveland Street strip, possibly because of a bomb threat.

A NSW Fire Brigades spokesman said more than 20 firefighters fought the blaze and had it under control after about 30 minutes.

He said the blaze was suspicious but could not speculate yet on what caused the explosion.