The fire that broke out at the dock of the northwestern English port town of Barrow-in-Furness was caused by a sand-blaster explosion that ignited foam-like polymer paneling tiles of the submarine, the report said.
"It was a bit like burning tires, but worse," the source told the newspaper.
The fire sparked fears of potential Russian sabotage, but multiple official sources have since then confirmed that the situation was purely an industrial accident, The Sun reported.
The police in the UK county of Cumbria said on Wednesday that two people had been taken to hospital for suspected smoke inhalation. The fire was put out only after 12 hours. Residents of Barrow-in-Furness were instructed to close windows and doors to avoid toxic smoke.