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Police have disabled a car bomb containing gas cylinders in the heart of central London.
Officers carried out a controlled explosion after reports of a suspicious vehicle parked in Haymarket shortly before 0200 BST (0100 GMT).
The area was cordoned off while police examined what they described as a "potentially viable explosive device".
Prime Minister Gordon Brown said Britain faces "a serious and continuous threat".
He added the public "need to be alert" at all times.
The prime minister's comments were echoed by the new Home Secretary Jacqui Smith who has chaired a meeting of the government's emergency unit Cobra.
The BBC's Andy Tighe said the timing was significant coming a day after Gordon Brown became prime minister, and with the second anniversary of the 7 July bombings approaching.
A witness reported seeing gas canisters being removed from the car, a silver Mercedes, at around 0400 BST (0300 GMT).
Bouncers from a nearby nightclub said they saw the car being driven erratically before it crashed into a bin. They said the driver then got out and ran off.
i know it's tedious to pick up on this, but as i'm a practicing sufi this week i'd better
i really enjoyed all the catholic greetings london got, back in the 70s/80s/90s
Fucking hell - kesh, the amount of IRA apologetics I have had to endure from waitrose socialists... you know, my Mummy worked in the city when lots of those things were going off, but these coulsdon boys etc - it doesn't affect them, so they make apologies for little boys' legs being blown off. and lots of these people are allowed to vote... :/
i worked in the city when those things were going off. i delivered forex contracts to bishopsgate, among other places, ffs.
i was trying to point out the error of attributing acts of terrorists to the religion of the terrorists
kesh, I wasn't calling you or your posts ira apologist (or even implying it), so there's no need for that. I know what you were trying to do. I'm not as thick as you think I am.