The pair, aged 13 and 14, were picked up close to the vacant Kepler Street pub shortly after the fire was reported about 5.15pm.

Detective Senior Constable Gary Greene, of the Warrnambool Criminal Investigation Unit, said the teens were spotted by a crew on its way to the fire after a description of one of the boys had been provided to police.

He said the 13-year-old had late last night been charged with arson and the 14-year-old with burglary.

Both were bailed to appear in the Warrnambool Children’s Court on April 29.

It took firefighters almost two hours to bring the fire under control.

More than 65 members from Warrnambool and local brigades were called in, plus specialist appliances from Ballarat. Firefighters used ladders to gain access to the top floor and broke open the front door.

Fire Officer Owen Maslen, of Warrnambool CFA, said the top floor accommodation area was severely damaged and the tiled roof destroyed.

“The ground floor is mainly smoke and water damaged,” he said.

Crews remained at the scene into the night, the area lit by State Emergency Service floodlights.

One firefighter was slightly injured and taken to hospital after he twisted his leg outside the hotel.

Acting Sergeant Steve Parkinson, of Warrnambool police, said trespassers had been a problem on a weekly basis at the pub, which has been vacant for two years.

“There’s nothing we can do — if you catch them here you can get rid of them.

‘‘But abandoned buildings attract kids,’’ he said.

Traffic was diverted away from the scene and through the Coles carpark.

The owners of the building have been in discussions with Heritage Victoria about $2 million plans to turn the former pub into office space.

Co-owner Peter Walsh said it was a major setback to the redevelopment plans.

“It’s a bastard,” he said.

“But you’ve got to move on I suppose. We can’t do much.

‘‘We’ve had problems with people breaking in. We board the place — that’s all you can do.

“They shouldn’t be in there in the first place — they’re trespassing on people’s property.”

Patrons standing at the rear of the Cally Hotel said their attention was drawn to the Criterion when they heard “an almighty explosion”.

One witness said “it sounded like a bomb going off” and they then saw black smoke pouring out of the building.