Firefighters set up a 200m exclusion zone around the area at the rear of Brighton Road.
Two oxy-acetylene cylinders exploded - one before firefighters arrived at around 8pm, and one as they were tackling the blaze.
It took six hours to bring the fire at gas central heating specialists Thermoserv Heating under control and the cordon is still in place this morning.
One Croydon firefighter said: "No one was hurt, which is one good reason for having an exclusion zone.
"Our main aim at all times is to protect people."
Six fire engines were called as well as five specialist vehicles, including a control vehicle and a fire investigation unit.
The building has been totally destroyed. Early indications are it was caused by an electrical fault.
Margaret Clark, 74, whose Brighton Road home is about 50 yards from the workshop, said: "I was sitting in my lounge watching TV when I smelt burning.
I went out and looked down a nearby alleyway and I saw smoke coming from the building.
"Almost immediately a fire engine pulled up."
She said within minutes poilice started callinbg on hers and neighbouring homes to say they must leave their houses quickly because of gas canisters at risk nearby.
She was eventually accommodated by a friend in Purley. in the meantime, staff at the nearby Gurkha Spice restaurant looked after her.
She said: "They were really nice, gave me water and let me use their toilet. I said to them, this is going to affect your business and the man shrugged his shoulders.
Miss Clark saw at least one resident sitting in a chair in the street with a blanket round her as the evacuation procedure was in full swing.
She decided to return to her home on Saturday lunchtime, despite the cordon still being in place.
She added: "It's all been very unsettling. That company must have been there at least 30 years."