A woman has been arrested after two homes were gutted by a suspicious fire in Melbourne's inner south-east.

Firefighters were called to the two homes on Highett Street, Richmond, about 3.30pm on Saturday, and found the houses fully engulfed by flames.

Metropolitan Fire Brigade spokeswoman Heather Stockton said 25 firefighters fought hard to keep the blaze from spreading to other homes in the area.
She said although the fire was brought under control after an hour, it left both houses gutted.

Ambulance Victoria spokesman Ray Rowe said paramedics treated a woman in her 70s for smoke inhalation at the scene, but she refused to be taken to hospital.

A 46-year-old woman has been taken into custody after setting fire to a pile of rubbish at the property, Victoria Police spokeswoman Melissa Seach said.

She was taken to St Vincent’s Hospital for assessment.

Ms Seach said police were investigating the fire.