Prosecutors said the two-day search in Hanover was linked to a murder investigation against a 43-year-old man but could not comment further.
Police used excavators, sniffer dogs, shovels and rakes to investigate the area of land . Officers put up two tents and continued to dig even further into the ground after they had cut down trees and bushes earlier this week.
The foundations of a garden house were found on the site and, among the remains, a hidden cellar room was found before the search was brought to an end, newspaper Bild reported.
In dramatic developments yesterday, cops removed two skips full of concrete blocks and a child’s bucket.
Strained looking officers were pictured standing on the site on Wednesday afternoon rubbing their face as the dig took its toll.
Neighbours told how Christian B, who has a history of 17 child sex offences, lived off-grid at the site.
He told them he wanted to insulate a small shack standing on a concrete base in the 15ft plot.
The structure was mysteriously demolished shortly after he left the site in 2007 or 2008, with no visible sign of the cellar left.
Wolfgang Kossack, 73, who owns a neighbouring plot, said Christian B told him he lived “off grid” at the time and no one knew he was there.
He would often be seen with a girlfriend and stayed in a VW Transporter parked next to the site.
Mr Kossack said: “He never did any gardening or tried to grow anything. He just sat around drinking beer.”
Locals claimed there had been no new tenants since he disappeared. One claimed the plot had “been untouched since 2007”.
The development comes a month after the owner of an allotment Christian B rented 45 miles away in Braunschweig claimed he wanted to build a “Fritzl cell” under her land.
Pals have previously said they and Christian B would joke about him emerging as a suspect, saying: “Maddie’s downstairs in the cellar. Come on Christian, get Maddie out of the cellar.”
Mr Kossack said he appeared to have plans to insulate the cellar, and was “trying to cut himself off and hide from society”.
Cops were tipped off about his use of the Hanover allotment by another tenant who saw a German crime show last month featuring Madeleine’s 2007 disappearance while on holiday in Praia da Luz.
He never did any gardening or tried to grow anything. He just sat around drinking beer.
The site is three miles from where a sex worker’s dismembered body was found in 2010.
Christian B was questioned over the murder but never charged.
Yesterday police removed the skips crammed with rubble, the bucket and old plates.
Prosecutors confirmed the search was in connection to Madeleine’s disappearance.
By evening police had packed up digging equipment and cordons keeping away the public were also relaxed.
Sources said the operation was likely to come to an end today after the significant discovery of the cellar and retrieval of key evidence.
Meanwhile, a neighbour at his former apartment block four miles away in the city of Hanover said police had been searching public gardens there.
The flats are next to a school with its playground visible from most windows.
The mother, who has lived there 15 years, said: “Last week there was a police helicopter overhead plus two tents on the street.
Police were very busy in the gardens opposite. They seemed to be looking for something. They wouldn’t say what they were doing but it makes sense now knowing that he lived here.
“Christian is remembered for selling weed. His block always stank of cannabis. He was the local dealer.”