LONDON - Investigators said on Wednesday they had found a "sophisticated" illegal gun factory in Sussex, southern England, and had made three arrests as part of an inquiry into the criminal production of firearms.

A site with a sign outside saying it was a gearbox repair business contained machinery and components suspected to be used to make firearms and ammunition, the National Crime Agency (NCA) said.

"NCA investigators have discovered what they believe to be a sophisticated gun factory on an industrial estate in East Sussex," the agency - which specialises in fighting serious and organised crime - said on its website.

The arrests were made on Saturday after officers heard bangs which sounded like gunshots from inside the unit in the town of Hailsham. A taser was used in one of the arrests.

Two handguns and ammunition, and guns in various stages of production were also recovered.

The head of the NCA's National Firearms Threat Centre Rob Hickinbottom said the investigation was continuing.

"We suspect that this operation has disrupted a group that would appear to be involved in the criminal production of firearms," he said.

(Reporting by Sarah Young; editing by Stephen Addison) ((sarah.young@thomsonreuters.com; +44 20 7542 1109; Reuters Messaging: sarah.young.thomsonreuters@reuters.net))