Detectives were last night questioning a 38-year-old man in connection with the murder of young graduate Melanie Hall in 1996.

The sensational development is a major breakthrough for the 14-year long inquiry and follows the discovery of the pretty hospital worker's body, near junction 14 on the M5 at Thornbury, in October last year.

Melanie, who lived with her parents Pat and Steve in the village of Bradford Leigh, near Bradford-on-Avon, was last seen on the dance floor of Cadillacs nightclub in Walcot Street, Bath, in the early hours of June 9, 1996 — she was 25.

The man, who is from Bath, was arrested after voluntarily going to the police station in Manvers Street in the city yesterday morning.

He is now being held at a station within the Avon and Somerset force area.

The arrest is part of an investigation into one of the many lines of inquiry which have been carried out by the police since Melanie's body was found.

It is the first significant arrest in this case since her remains were discovered bound in rope and dumped in a black bin bag.

Last night in a statement, Detective Superintendent Mike Courtiour, who has been heading the investigation since her remains were found, said: "This is obviously a significant development after 14 years but I must stress that our investigation is still very much ongoing.

"Melanie's parents, Pat and Steve Hall, are always kept informed and are aware that we have made an arrest. This is part of the investigation that has been going on now for eight months since Melanie's body was discovered.

"In that time the investigation team has continued to work tirelessly, following up new information we have received and revisiting the previous investigations that followed Melanie's disappearance from Walcot Street in June 1996. An additional 250 statements have been taken and 1,200 new tasks and investigative actions have been completed. Today's arrest was one such action.

"I, once again, urge anyone with information to come forward and provide us with the information and evidence we need to identify Melanie's killer or killers and bring them to justice."

Police officers involved in the inquiry from when Melanie was first reported missing have always believed the answer to what happened to her lay in Bath.

Just three weeks ago, her parents, who still live at the family home in Bradford Leigh, marked the 14th anniversary of their daughter's disappearance as they always have done by placing yellow roses in her bedroom.

For the first time in 14 years they knew exactly where she was – had she lived Melanie would have been celebrating her 40th birthday this summer.

Pat said then: "It does make you feel different having found her. The waiting has finished, we spent 13 and a half years waiting. I can really only explain it as if you took your children to the seaside or a shop and you turn your back and then you turn around and they are gone, all you want to know is where they are.

"Real panic sets in but just for a few minutes before they are found. Imagine 13 and a half years of wondering where your daughter is."

When she was found her body had been stripped of all clothing and jewellery except, bizarrely, a treasured ring given to her by her grandmother, which was left on her finger and proved to be the key to identifying Melanie.

A detailed search of the scene where she was found failed to find any evidence of clothing such as a dress zip or buttons which would have been expected despite the length of time since she vanished.

Officers say it is possible the killer kept an item of her clothing as a trophy.

Melanie had suffered significant head injuries and her mother said in June: "I still worry that whatever happened she must have been really frightened. I cannot get that out of my mind. It is one of those things that you don't dwell on all the time – if you imagine it was your daughter dumped on the side of the road with severe head injuries, what would you do?"

The discovery of her remains threw up more questions as not only were Melanie's clothes missing along with her bag, jacket, watch and jewellery – but also who had access to bin bags, blue rope and transport to drive her 30 miles to dump her.

Earlier this year, police had to admit that frustratingly there was no forensic breakthrough but scientific tests were still underway and they had already shown her body was probably dumped shortly after she was killed. Going back over the initial investigation was a major task and detectives were keen to identify women seen in Walcot Street near the nightclub and in Old Orchard Lane alongside the club between 1am and 3am on Sunday, June 9, 1996.

Codenamed Operation Denmark, the 15-strong police team has been liaising with the National Policing Improvement Agency (NPIA), which is helping with geographical and behavioural profiling, and the Serious Crime Analysis Section (SCAS), which looks at whether other crimes could be linked to Melanie's murder.

Anyone with information is asked to contact the Murder Incident Room on 0117 9455811 or Crimestoppers on 0800 555111.