Chinese authorities have arrested a guesthouse owner whose heater allegedly sparked a fire that burned for nearly 10 hours and destroyed an ancient Tibetan town.

More than 2,000 firefighters, soldiers, police, local officials and volunteers responded to the early morning blaze on January 11, which destroyed 343 houses and many historic artifacts in Dukezong, Shangri La county's old neighbourhood.

Tang Ying, operator of the Ruyi Inn guesthouse, was arrested on Saturday for allegedly causing the fire. State news agency Xinhua said she forgot to turn off the heater, which later set fire to a curtain.

Local authorities have said a million-dollar fire prevention system failed to work. Witnesses said hydrants failed to pump water and that fire engines were kept outside the area's narrow alleys.

Once called Gyaitang Zong, the county surrounding Dukezong renamed itself Shangri La in 2001, hoping to draw tourists by referencing the mythical Himalayan land described in James Hilton's 1933 novel. 

In 2005, the county started to renovate its ancient Tibetan quarter of Dukezong, which dates back to more than 1,000 years and is known for its preserved cobbled streets, ancient structures and Tibetan culture. 

Tourism is virtually the only industry in Tibet.

Source: Agencies