Large numbers of migrants and refugees -- including unaccompanied children -- have been left homeless, according to an aid agency.
The fire, which destroyed wooden shelters at the Linière camp in Grande-Synthe on the outskirts of Dunkirk, began with a fight amid tense and overcrowded conditions, a spokeswoman for the prefect of the Nord region of France told CNN on Tuesday.
"I went there this morning, and I can say the whole camp is burned down," she said.
"It all started with a fight between the Afghans and the Kurds. They argued about their territory and their personal space. They wanted to control their territory."
Influx from Jungle caused tensions
The camp was set up in March 2016 by Dunkirk city council and Médecins Sans Frontières (Doctors Without Borders) to shelter British-bound refugees and migrants who had been living in squalid conditions in an unofficial camp nearby.
MSF contributed 2.6 million euros
to setting the camp up. Last October, the population swelled after the closure of the sprawling "Jungle" camp at Calais
around 40 kilometres (25 miles) away.
"Following the closure of the Calais camp, the Afghans were sent here, which displeased some of the other refugees," the spokeswoman for the prefect told CNN.
"In the Grande-Synthe camp, there are about 1,500 refugees, whereas there's space for about 800 of them, so it creates tensions."
Migrants torched the "Jungle"
during the demolition operation last year. An investigation has been launched to determine the cause of the Linière fire and inhabitants have been taken to temporary shelters in gymnasiums nearby.
Several hurt in fight and blaze
Reuters has reported that five people had been hurt as a result of the blaze and five injured in scuffles and a knife fight that preceded the fire.
One migrant was knocked over by a car on a highway outside the camp and was in a critical condition.
Riot police and 59 firefighters intervened to tackle the unrest and the flames.
Prefect of the Nord region, Michel Lalande, told reporters "no one is able to explain how these events could have happened.
"There is nothing left but a heap of ashes," he added.
According to Lalande, 500 migrants have been sheltered but the location of around 900 others was unknown on Tuesday.
Concern for those left homeless
The charity Help Refugees has set up an appeal
for those left homeless.
"There are groups that are just walking around," Annie Gavrilescu, the charity's regional manager, told CNN.
"One group of a few hundred people is between Calais and Dunkirk and there is not enough space (in the temporary shelters) for the minors -- we have information on 120 unaccompanied minors -- and we are trying to make sure that they are OK."
"People are scared -- they have no idea what's going to happen to them."
French officials announced last month that they planned to dismantle the camp because of unrest, although the local government pledged to keep it open until at least September, according to Gavrilescu.
Police intervened last month when five men were injured in a fight and another man was stabbed in November, according to AFP.