More than 10 tonnes of sawdust held in a vast silo went up in flames last night sending plumes of black smoke over Kirkby.
The blaze broke out just weeks after the factory fully reopened following a devastating fire in June.
The Health and Safety Executive, which has been called to 22 serious incidents over the past decade, was today poised to launch an investigation as campaigners insisted “enough is enough”.
Helen Moss, who coordinates the Say Bye To Sonae campaign and lives near the site, said: “This has got to be the final straw.
“How many accidents and incidents must there be before this factory is shut down? The buck has to stop somewhere.
“This factory supports jobs in the local area but why should they work in unsafe conditions?
“It has only been back open five weeks from the last fire.
“This has got to be the final straw. We all want to see action taken. This cannot go on.”
The Health and Safety Executive said it had been informed of the fire and was “making initial enquiries”.
But the severity of the fire and the factory’s alarming safety record means an investigation will now almost certainly follow.
The department is already investigating the deaths of two workers dragged into machinery in December 2010 and the death of a third worker in August last year who was crushed on a cherry picker.
A probe also continues into last June’s huge fire in which 1,500 tonnes of wood chips went up in flames.
The blaze took firefighters eight days to extinguish and led to Sonae spending £25m on repairs.
Last night the alarm was raised again and fire crews were called to the plant at around 6.30pm.
A Merseyside Fire and Rescue spokesman said eight fire engines were on the scene at the fire’s peak, with the blaze brought under control shortly after 1am.
Three explosion vents and electrical systems were damaged in the blast.
The spokesman said: “We believe the fire started in a silo and in the conveyor belt system. We have yet to determine the cause.”
Residents today demanded the factory’s closure.
Brian Kerrigan, who lives on Jarett Walk just around the corner from the plant, said: “My girlfriend’s son heard big bangs. He said he saw sparks coming out of the chimney.
“The last time this happened the place burned for days, the smell was disgusting.
“I think it’s a disgrace this has gone on for so long. I’d be glad to see the back of the place.”
The factory has been surrounded by controversy over the past few years with neighbours claiming foul-smelling odours from the site were a health hazard although no link has ever been proven.
Joe Morgan has lived opposite the factory in Northwood for 17 years.
He said: “There were two explosions – one large and one small. I was upstairs and the windows of my house rattled.
“It’s time to close it down, they should have done it when those two lads died.”
Nigel Graham, managing director of Sonae Industria (UK) Ltd, tried to deliver some reassurance.
He told the ECHO: “We can confirm that there was a fire in one of the silos this evening at around 6.30pm and there were no injuries.
“The safety systems activated and stopped the spread of fire with the internal sprinklers preventing any further damage to the equipment.
“We can reassure local residents that the fire has been extinguished and do not expect there to be issues with ongoing smoke.
“An investigation is already underway to determine the cause.”
A spokesman for Knowsley council today declined to comment.