A 31-year-old man is being questioned following the deaths of the young girls in Nottingham.
A murder investigation has been launched after two children died in a flat fire in Nottingham.
The children, aged three and one, died in hospital after the blaze in Fairlisle Close, Clifton, early on Sunday morning.
A woman has also been left critically injured, Nottinghamshire Police said.
A joint fire and police investigation has concluded the fire, which was extinguished at about 04:00 GMT, was started deliberately.
The fire was in a first floor flat of a two-storey residential property.
Neighbouring properties were temporarily evacuated as fire crews tackled the blaze.
At the scene
Sarah Hawley, BBC East Midlands Today
The scene here is cordoned off with a lone police officer standing guard.
Forensic teams are coming in and out of the property as investigations continue.
I’ve just spoken to one of the inspectors who says this is a devastating incident both for the emergency services and the local community.
Lots of residents who were evacuated last night are now back in their homes but the area is very quiet.
‘Tragic and sad’
The injured woman, who is thought to be in her 30s, and the children were initially treated at the scene by paramedics for smoke inhalation and taken to Queen’s Medical Centre in Nottingham.
Det Ch Insp Greg McGill, from Nottinghamshire Police, said: “These are tragic and very sad circumstances and my thoughts are with the family of those involved.
“Following a joint investigation with Nottinghamshire Fire and Rescue Service we have established that the fire was started deliberately.
“We are appealing for witnesses who were in the area at that time and saw something suspicious to please come forward and help us with the investigation.
“We have a team of detectives who are working hard to establish the circumstances and our inquiries remain in their early stages.”
Insp Ben Lawrence said the Clifton community will see a “high presence of officers” in the area while inquiries continue.
Chris Clark, from Nottinghamshire Fire and Rescue Service, added: “Alongside the police we will now investigate the cause of this fire and tragic loss of life.
“We recognise what has happened will be deeply distressing for the local community, and we will be in the area to offer reassurance to residents over the coming days.”
Nottingham City Council leader David Mellen said the loss of two young children is “completely heart breaking” and the authority will “do all it can” to support the family and community.
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