  We present spectropolarimetry observations of GRB 021004 obtained at the ESO
VLT. We detect a remarkable increase of the degree of polarization blueward of
the host galaxy rest frame Ly-alpha to about 5-10% that corresponds to a
decrease in the continuum flux below the extrapolation of a power law. An
increase of the degree of polarization is perhaps also recorded in some narrow
lines, but of lower statistical significance. The broad polarization feature
blueward of the Ly-alpha absorption line at 4040 \AA is at least partially
produced by hydrogen-rich material with velocities approaching 40,000 \kms\
located beyond the front of the afterglow shock, rather than due entirely to
intergalactic Ly-alpha absorption systems on the line of sight to the GRB. The
presence of the broad Ly-alpha absorption provides evidence that the GRB
occurred inside the ejecta from a hydrogen-rich supernova that exploded before
the GRB.
