MORE than 30 firefighters tackled the fire at the two-storey building in Hoole Lane.
The upstairs flat at the end of the block of flats was completely destroyed. The downstairs flat, directly underneath, was badly damaged but remained intact.
Neighbouring flats were evacuated.
Cheshire Fire and Rescue Service said it was "unbelievable" nobody had been injured in the blaze.
The explosion which caused the fire is thought to have happened about 12.50am.
Debris from the explosion was scattered on to nearby properties.
Cheshire Police and fire investigators are working to establish how the incident happened.
A spokesman for the fire service said: "The top floor flat has virtually disappeared. The rest of the building is very unstable."
Structural engineers from Chester and West Cheshire Council were sent to the scene to assess the safety of the Chester and District Housing Trust owned property.
Simon Brennan, who lives in nearby flats and took amazing photos featured which feature in Chronicle Xtra,said: "I heard a bang and couldn't believe my eyes when I opened the curtains to see a huge fireball.
"The window frames from the flats were blown out and underneath cars 30 metres away - nobody inside would have survived.
"I then dashed outside to try and help but the debris was flying in every direction."
Another neighbour described the explosion as an "earth shattering bang".
Hoole Lane was closed from its junction with Wharton Court and the main road through Boughton