The explosion happened this week, leaving the 66-year-old suspect in a serious condition.
The woman inside the home incredibly suffered minor injuries as the house was reduced to rubble.
Police have confirmed one arrest has been made, and according to The Sun Ian Clowes is suspected of causing the explosion. He and wife Elaine are said to have divorced two years ago, and he was set to be evicted, the newspaper reports.
He was reportedly living in an upstairs flat in the property after the home was divided in two.
A woman in her sixties was treated at the scene for minor injuries, Dorset Police said.
Emergency services were called at around 1.45pm on Monday after the blast at Sterte Road in Poole, Dorset.
Retired nurse Norah Wilson said when she saw the state of the house she could not believe anyone could have survived.
The 85-year-old said: "I heard this huge bang and ran out to help.
"There was all this smoke and the house was completely destroyed. You could smell gas.
"Debris was covering two cars in front to the house.
"I thought to myself how could anybody survive that."
The woman, who was 'walking wounded', was handed over to paramedics while fire crews wearing breathing apparatus entered the building to rescue the man.
He was carried out by firefighters and laid out on the road where he received attention for some time before being transferred to an air ambulance.
He was flown to the Southmead Hospital in Bristol which specialises in major trauma and burns.
Retired soldier Brian Wright, 80, said he was stunned to see the woman walk out of the destroyed house, albeit in a 'dazed' state.
He said: "There was a terrific, crashing noise and straight away I thought it was a gas explosion.
"I saw the woman walk out the house and she looked dazed. She was taken care of by an ambulance crew.
"The other person was gravely injured and was carried out of the remains of the house.
"They laid him in the road and attended to them for quite some time, with the fire crew holding a screen up for privacy."
The explosion caused the house to partially collapse and nearby residents were evacuated as a precaution.