Neighbours living close to a former care home were terrified as flames tore through the site yesterday.
The fire is now being treated as a result of suspected arson, police said.
Emergency services were called around 6.55pm to the former Knotty Ash Residential Home on East Prescot Road.
Four fire engines raced to the scene and thick smoke and flames took hold of the building.
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Merseyside Fire and Rescue Service said firefighters arrived to find a wooden shed fire had spread to a single storey building and then to a two storey annexe and roof.
Crews wearing breathing apparatus were sent inside the building to put out the blaze which raged for over an hour.
One witness, Paul Evans, described the blaze as "a horror for the neighbours."
At around 8.25pm the fire service said it looked as though the fire was almost extinguished.
Nobody was injured but the fire is reported to have caused "extensive damage" to the whole site.
Today, police confirmed they suspect the fire was deliberately started inside the shed.
A spokesperson for Merseyside Police said: "We are appealing for information following a suspected arson at a former nursing home in Knotty Ash on Monday, May 10.
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"At around 6.55pm we received a report that the Knotty Ash Residential home site on East Prescot Road was on fire. The fire is believed to have started inside a shed and spread to the adjoining building.
"Merseyside Fire and Rescue Service (MFRS) extinguished the fire, which has caused extensive damage to the site. No injuries were reported.
"Following a joint investigation with MFRS, it is believed the fire was started deliberately and enquiries are ongoing to establish the full circumstances."
Inspector Gavin Mulcahy said: “Starting a fire deliberately in this manner is utterly irresponsible. It has put lives at risk and placed an unnecessary strain on our already overstretched emergency services.
“This apparent reckless disregard for people and property is not acceptable in Merseyside, and we are determined to identify those responsible.
“If you saw anything or anyone suspicious in the East Prescot Road area on Monday evening, please come forward as your information could help assist us with enquiries.
“Whether you contact us directly or anonymously through the independent charity Crimestoppers, your information will be acted upon.”
Anyone with information is asked to contact @MerPolCC on Twitter, 'Merseyside Police Contact Centre' on Facebook, call 101 or the independent charity @CrimestoppersUK anonymously, on 0800 555 111, with reference 21000300407.