ITN reports:
A plot to kill hundreds of London revellers was foiled when police found a car packed with nails, petrol and gas canisters by chance.
Carnage was averted in the early hours of Friday morning when police defused a bomb in the Mercedes saloon car left outside the Tiger Tiger nightclub in The Haymarket, just yards from Piccadilly Circus.
Hours later, Park Lane was sealed off by police examining a vehicle left in the entrance of a car park. The prestigious London road has reopened but Metropolitan Police are refusing to confirm reports that explosives were found in the car.
The vehicle carrying the Haymarket bomb was first spotted by a vigilant London ambulance crew who had been called to the area to attend an injured man. They saw what appeared to be smoke coming from the car and phoned police.
Officers believe the smoke was vapour released from at least 60 litres of volatile petrol held inside the car. The club was evacuated and the area cordoned off while explosives officers made the device safe.
Scotland Yard declined to comment on reports that a mobile phone was found in the Mercedes that may have been intended to trigger the explosion. Some reports claim a quick-thinking officer disconnected the phone before bomb squad officers arrived.
A massive international manhunt is now under way for whoever fled the metallic light green car. Counter-terror detectives, working with MI5 officers, are believed to have a description of the suspect.
Deputy Assistant Commissioner Peter Clarke, head of Scotland Yard's counter-terrorism command, said: "There was no intelligence whatsoever that we were going to be attacked in this way."
Hundreds of revellers were in The Haymarket area at the time of the first incident. The club is close to celebrity haunts such as Chinawhite and the famous Trocadero complex.
A source said it is too early to tell if the perpetrator was a lone individual or part of a wider plot. Commuters have suffered delays as Piccadilly Circus Tube station remains closed.
Mr Clarke said the courage of bomb squad officers saved lives. He added: "It is obvious that if the device had detonated, there could have been significant injury or loss of life. We are doing absolutely everything we can in our power to keep the public safe.
"The threat from terrorism is real and is here. Life must go on but we must all stay alert to the threat as we go on with our lives."
Prime Minister Gordon Brown said the incident showed that Britain faces "a serious and continuous threat" and the public need to be alert at all times.
The Government's emergency response committee, Cobra, met this morning before briefing the Cabinet on the dramatic events.
Speaking in her first full day in the job, Home Secretary Jacqui Smith said: "What I think is very important is that the public remain vigilant at all times."
Liberal Democrat leader Sir Menzies Campbell said: "We should praise the police for their professionalism and diligence.
Responding to the incident, Defence Secretary Des Browne said: "It does appear to be a very serious incident. My first reaction to this is, thank God that we have police and explosives experts who can make these devices safe, and that nobody has been injured."
The plot might have been inspired by terrorist mastermind Dhiren Barot, who was jailed for life last November. He conspired to park limousines packed with gas canisters underneath high-profile buildings before detonating them.
The gang behind the fertiliser bomb plot planned to target nightclubs such as the Ministry of Sound in London. The five members, jailed for life earlier this year, had close links with the July 7 London bombers.
The incident comes almost two years after four suicide bombers brought carnage to London's transport network, claiming the lives of 52 innocent people on July 7.