We present photometry and spectroscopy of the afterglow of GRB 030323 . VLT spectra of the afterglow show damped Ly \alpha ( DLA ) absorption and low- and high-ionization lines at a redshift z =3.3718 \pm 0.0005 . The inferred neutral hydrogen column density , log N ( H i ) =21.90 \pm 0.07 , is larger than any ( GRB- or QSO- ) DLA H i column density inferred directly from Ly \alpha in absorption . From the afterglow photometry , we derive a conservative upper limit to the host-galaxy extinction : A _ { V } < 0.5 mag . The iron abundance is [ Fe/H ] =–1.47 \pm 0.11 , while the metallicity of the gas as measured from sulphur is [ S/H ] =–1.26 \pm 0.20 . We derive an upper limit on the H _ { 2 } molecular fraction of 2 N ( H _ { 2 } ) / ( 2 N ( H _ { 2 } ) + N ( H i ) ) \mathrel { \hbox { \hbox to 0.0 pt { \lower 2.365 pt \hbox { $ \sim$ } } \kern 0.0 pt \raise 1. % 72 pt \hbox { $ < $ } } } 10 ^ { -6 } . In the Ly \alpha trough , a Ly \alpha emission line is detected , which corresponds to a star-formation rate ( not corrected for dust extinction ) of roughly 1 M _ { \odot } yr ^ { -1 } . All these results are consistent with the host galaxy of GRB 030323 consisting of a low metallicity gas with a low dust content . We detect fine-structure lines of silicon , Si ii * , which have never been clearly detected in QSO-DLAs ; this suggests that these lines are produced in the vicinity of the GRB explosion site . Under the assumption that these fine-structure levels are populated by particle collisions , we estimate the H i volume density to be n _ { { H \textsc { i } } } = 10 ^ { 2 } -10 ^ { 4 } cm ^ { -3 } . HST/ACS imaging 4 months after the burst shows an extended AB ( F606W ) =28.0 \pm 0.3 mag object at a distance of 0 \aas@@fstack { \prime \prime } 14 ( 1kpc ) from the early afterglow location , which presumably is the host galaxy of GRB 030323 .