A man has been charged with murder after allegedly starting the fire that killed three squatters in a warehouse in Footscray Wednesday night.

The 52-year-old was arrested Thursday in the CBD and charged with three counts of murder, three counts of arson causing death, and arson.

Witnesses heard screams from inside the old Kinnears rope factory, on Ballarat Road Footscray, after a blaze ripped through it at 11.30 Wednesday night.

After bringing the fierce blaze under control fire fighters found the bodies of two men and a woman, understood to be aged between late 20's and early 40's.