Stunned residents thought police had discovered a terrorist arms haul when they saw a rocket launcher, machine guns and other weapons being taken from a flat.

Army bomb disposal experts were called in to help police search the flat and check hand grenades and other shells found there.

Officers were told all the weapons were either replicas or had been decommissioned so that they could not fire.

They stumbled across the collection after a wallet was reported stolen from a basement flat in Norfolk Square, Brighton.

When police arrived to investigate they noticed a large number of weapons in the flat.

Owner Owen Richards, 35, assured them he was a collector and they were not capable of being fired.

Officers returned to the flat at about 3am on Saturday and arrested Mr Richards, a computer programmer, and seized his collection.

Police and the bomb squad spent until 6.30pm on Saturday taking weapons from the flat for expert examination.

Mr Owen was taken to the city's John Street police station for questioning. He was released on police bail several hours later.

He said: "I have been a collector for a number of years and have never been in trouble let alone arrested before. I am just an ordinary computer programmer.

"I have always had an interest in militaria and wanted to be in the RAF but I could not join because I am colour blind.

"None of the weapons can be fired and the police are carrying out tests to satisfy themselves that this is correct.

"I understand the police had to check this out and I believe they acted reasonably and responsibly in the circumstances."

Sarah Peach, 28, who lives in the flat above Mr Owen, said she noticed police going to and from the basement at about 11am on Saturday.

She said: "I did not take a great deal of notice and went out. When I came back I saw them carrying rifles out to a van.

"I was shocked because I had no idea they were down there and did not know if they were real."

Ian Smallwood, a barman at the nearby Grosvenor Arms pub, watched in amazement as police loaded the weapons.

He said: "It was incredible. We thought they had discovered a terrorist arms dump in the basement."

Many of the items taken from the flat still had price tags on them and were from the first and second world wars.

Detective Constable Steve Grainger of Brighton police said most of the items were bought from antique shops.

He said: "We arrested him because he had so many weapons and did not seem to have certificates for all of them and he's saying they have all been deactivated.

"He has bought them as a collector and in a deactivated state and we have asked for a forensic specialist to come down to examine them to ensure they have all been deactivated."