As blazes burned wildly around Australia's largest city for a 10th day and thousands fled their homes Thursday, police discovered the remains of what might have been two homemade bombs used by arsonists to set tinder-dry forests afire.

More than 100 bush fires raging out of control near Sydney and in its suburbs were being fanned by hot, dry and swirling winds. Smoke clouds towered above the city of 4 million people.

At Sussex Inlet, a coastal hamlet about 120 miles south of Sydney, about 5,000 residents and summer vacationers fled a massive fire storm that burned as many as 12 homes and damaged others.

That brought to almost 160 the number of houses lost since the "black Christmas" wildfire emergency began Christmas Eve.

Many people braved choking smoke and a fast-moving fire front and drove out of the town. Firefighters, mostly volunteers, frantically engaged in a house-by-house battle to save lives and property.

Cut off by 50-foot flames that jumped roads, other people spent much of Wednesday night on a beach.

New South Wales state Premier Bob Carr vowed to punish those "driven by madness and wickedness" to start fires.

At least half of the wildfires have been deliberately lit since the crisis started Christmas Eve. Police have arrested 21 arson suspects.

These include 14 juveniles, aged between 9 and 16 years, and characterized as troublemakers bored during a current summer school vacation.

"I want to rub their noses in the ashes they have caused," Carr said.

While adult offenders would face prison terms of up to 14 years, young firebugs would be made to confront burns victims and families who lost homes. They would work on rehabilitation projects for scorched forests.

As the hunt for more arsonists continued, police said they found the pieces of what appeared to be incendiary devices at two separate charred bushland sites, including one where fierce flames threatened hundreds of homes, just 11 miles from downtown Sydney.

Senior deputy Police Commissioner Ken Moroney said the device found there was "capable of being ignited and causing substantial damage," national news agency Australian Associated Press reported.

He declined to give more details, saying police feared copycat attacks.

Some residents had reported hearing an explosion just before the fire broke out Tuesday and triggered two days of havoc across Sydney's affluent northern suburbs.

Firefighters, who at times were forced to take water from backyard swimming pools, were still trying to contain that blaze on Wednesday night. Water dumping helicopters roared overhead and many streets were blocked off amid safety concerns and choking smoke.

Ash sprinkled over central Sydney, although it was not in danger.

The Daily Telegraph newspaper also reported that police were hunting a possible serial arsonist who may have set many fires.

Meanwhile, about 20,000 firefighters were stretched to their limit when temperatures soared above 100 degrees. Westerly winds roared in from Australia's arid Outback, fanning flames and scattering red hot embers to start new spot fires.

Hundreds of reinforcements were being flown in from other Australian states and neighboring New Zealand.

As the danger rose, more than 2,000 residents were ordered to flee Sussex Inlet, 60 miles south of Sydney, before at least eight houses were burned in a firestorm that jumped a highway.

That brought to almost 160 the number of homes lost since the "black Christmas" wildfire emergency began.

About 600 people fled Bowen Mountain village in the Blue Mountains, 50 miles west of Sydney, ahead of a 37-mile wall of flame.

People also were told to leave parts of the Hawkesbury River valley, 25 miles to the north.

Eighteen people, including three police officers, were evacuated by helicopter from the fire-ringed hamlet of Colo Heights, 37 miles northwest of Sydney.

While there have been no casualties, the fires have blackened more than 741,000 acres of forest and farmland. Damage has been estimated at more than $25 million.

Many of fire-hit areas were burned by near-identical blazes in 1994, when four people were killed and scores of homes destroyed.