Andrew Partington, 28, an unemployed joiner, cut the gas pipes in his own house and let it fill with gas overnight, a court heard.
The resulting blast obliterated Partington's rented terraced house in Shaw, near Oldham, Greater Manchester, as well as destroying two properties next door.
Jamie Heaton, described by his family as "happy, loving little boy", was killed as he watched children's television in the front room while his mother Michelle hung out washing in the back yard.
His mother clawed through the rubble to find her son but he could not be saved.
The explosion also left the rest of the row of houses and surrounding streets seriously damaged.
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Partington, a father of six who was seriously injured in the incident, appeared at Manchester Crown Court via videolink from Forest Bank Prison in Salford today.
He pleaded guilty to manslaughter and eight charges of causing more than £1 million of damage to neighbouring houses in the blast on Buckley Street in Shaw on June 26.
Jamie's parents sat in the public gallery of the court holding hands for the brief hearing.
They were flanked by police officers and other members of their family, who wiped away tears as the defendant admitted his guilt.
The toddler's family told of their devastating loss in a statement released at the time of his death.
They said: "Jamie was a happy, loving little boy - precious son to Michelle and Kenny and loving little brother to Jodie and Jack.
"Jamie's life was full of laughter. He loved going to pre-school, playing with sand and water, and going to the park. He touched the hearts of all who knew him and will be missed by all."
Partington, who wore a white T-shirt covered by a light blue bib, kept his head down for most of today's hearing.
Adam Roxborough, defending, said that the unemployed joiner was still suffering physical difficulties in his movement from injuries sustained in the explosion.
Judge Andrew Gilbart QC warned Partington he was facing jail and remanded him in custody until February 11, when he will be sentenced.