Flames threatened to engulf part of historic Lewes town centre in a swift-moving blaze which brought Christmas shopping to a standstill.
The fire was spreading into neighbouring buildings in Fisher Street, with flames licking the Assembly Rooms opposite, when the alarm was raised.
The streets became clogged with smoke, forcing the army of shoppers hurrying for last-minute presents out of the area.
Onlookers feared a repeat of the disastrous fire in Edinburgh's Old Town earlier this month.
Flames were seen coming from a first-floor flat shortly before 6pm on Saturday.
Among the first to spot the blaze was Lewes District Council leader Ann De Vecchi, who was driving in Fisher Street.
She said: "The first thing people noticed were flames leaping out of the window and over the street."
The flat, above letting agents Stanley and Partners, was engulfed. Flames were spreading through roof cavities as firefighters arrived.
More than 60 firefighters from East and West Sussex were called as buildings either side were threatened. They struggled for two-and-a-half hours to bring the blaze under control and were damping down all night.
Divisional Officer Richard Ashley, of East Sussex Fire Brigade, said only "serious hard graft" stopped the blaze sweeping across more of the historic town centre. He joined firefighters an hour after the first call.
He said: "It was extremely severe. We still had flames coming from the property and the roof of the adjacent premises and the town centre was completely smoke-logged.
"Flames and smoke were coming along the rooftops.
"We were fearful we had a fire that would spread further. It is only because of the serious hard graft of firefighters that we stopped it where it was."
He said the cause of the fire was still being investigated but it was not believed to be suspicious.
Nobody was injured, although there had been early fears people were trapped inside the flat. The first-floor rooms were destroyed and the second-floor and roof badly damaged by flames and smoke.
The Ask restaurant had to be evacuated as it prepared for its busiest night of the week.
Ken Holt, director of neighbouring electrical retailers and engineers CH Seymour Ltd, said: "We have got damage but the building could have gone too. I think we have come off very lightly.
"The firefighters were brilliant to stop the fire spreading further through the roofs."
The fire was started by a candle which had been lit and placed on a plastic cassette tape holder, East Sussex Fire Brigade said this morning.
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