BAC NINH (AFP) - A baby boy and a a five-year-old girl were killed and several people injured on Wednesday (Jan 3) when a cache of bullets illegally stored at a scrap metal warehouse exploded east of Vietnam's capital Hanoi, destroying several houses and leaving a massive crater.

A scrap merchant was later held for "illegally stockpiling and buying weapons", the state-run Bao Giao Thong website said, explaining he had stored seven tonnes of old bullets in his garden in Bac Ninh province since 2016 to be dismantled for the metal.

The blast occurred at 4.30am, demolishing buildings while residents slept, sending debris flying through the air and gouging a huge hole in the earth.

The explosion reduced four homes to rubble and shattered the windows of surrounding buildings.

A one-year-old boy and a girl were killed, according to a report from the provincial health department seen by AFP.

At least eight others were injured by the blast, district authorities said in a statement.

Resident Nguyen Thi Tap told AFP her house was badly damaged by the explosion, which jolted her from her sleep early in the morning.

"We were so scared. I thought thunder had struck my roof... I hugged my daughter and the doors crashed down on us," she said.

According to a local official, who requested anonymity, the explosion took place in an area "where there are many families involved in collecting scrap (metal)."

Salvage of metal from the tonnes of Vietnam War-era bombs that still blanket the country often ends in tragedy.

In August, six people were killed, including three children, when a war-era bomb exploded in Kanh Hoa province. Reports at the time suggested it detonated as scrap workers cut it open.

Since the end of the Vietnam War in 1975, more than 42,000 people have been killed and over 62,100 injured by unexploded ordnance dropped by US aircraft, according to government figures.