Two men suffered burns when petrol from a car they were fixing seeped into a nearby sewer and exploded.
Emergency services were called to the explosion on Edward Street in Preston, Lancashire, on Thursday night.
A manhole cover was blown off with the force of the blast and fumes travelled through pipes into nearby homes, damaging some bathrooms.
One of the men, Luke Jackson, is being treated for 23% burns at Wythenshawe Hospital in Manchester.
Initial inquiries suggest part of the car's fuel tank was placed near a manhole and petrol found its way into the sewer, before the vapours ignited.
Watch Manager Steve Green, from Lancashire Fire and Rescue, said: "One of the guys has lit a cigarette with a lighter and as soon as he lit, basically the thing exploded and he's been engulfed in a fireball."
United Utilities, which owns and operates the public sewers, is carrying out the inquiry.
Paul Jones, from United Utilities, said: "If petrol enters the sewer it can be very dangerous and therefore it should be disposed of in the right and appropriate way.
"I would urge any member of the public working on cars at home to think about your surroundings when dismantling the vehicle and check that there are no manhole covers nearby."
The company recently launched a campaign called "What not to flush" to encourage the public to think about what they pour into sewers.
It said items such as baby wipes were really bad for causing blockages.
But engineers have also dealt with substances including paint, cat litter, syringes and other chemicals.