Sky News reports:
Police have confirmed that not one, but two massive car bombs were set to explode in the heart of London's West End.
The first car, in Haymarket, was a metallic green Mercedes packed with petrol, gas cannisters and nails, and was defused after police were alerted by an ambulance crew called to an incident at a nearby nightclub in the early hours of Friday morning.
The second bomb was in a car that was illegally parked nearby and towed to the Park Lane car pound.
Staff there alerted police because "it smelled of gas."
Car removed from scene
That device has also been made safe and has been taken away for examination.
In a news conference Deputy Assistant Commissioner Peter Clarke said the second car, a blue Mercedes, was parked a few hundred yards from the first in Cockspur Street which runs between Haymarket and Trafalgar Square.
It was issued with a parking ticket at around 2:30am on Friday before being towed to the Park Lane car pound where staff alerted police.
DAC Clarke said: "The vehicle was found to contain very similar materials to the first vehicle in Haymarket.
"There was a considerable amount of fuel and gas cannisters, as in the first vehicle. There was also a substantial quantity of nails.
"This device, like the first was potentially viable and was made safe by explosives officers. The vehicles are clearly linked."
"The discovery of a second bomb is obviously troubling and reinforces the need for the public to remain vigilant."
He also asked anyone who may have seen the blue Mercedes parked in Cockspur Street to come forward.
Hyde Park and Park Lane sealed off
Sky News sources say one of the first police officers on the scene of the Haymarket car bomb may have saved dozens of lives by defusing the explosives before the bomb squad arrived.
It is believed the quick-thinking cop recognised that the car was wired to blow up, jumped in and disconnected the trigger device, thought to be a mobile phone.
The device, which contained 60 litres of petrol, a large amount of nails and several gas canisters, was found in the Mercedes early this morning.
Police had received reports of a suspicious vehicle close to the Tiger Tiger nightclub in Piccadilly shortly before 2am on Friday morning.
An ambulance crew, who treated a person in the club in an unrelated incident, reported that there was smoke inside the car.
Home Secretary Jacqui Smith said the UK is "currently facing the most serious and sustained threat" and authorities are doing everything they can to protect the public.
Police believe they have foiled a major terror attack and said if the Haymarket bomb had gone off it could have caused "significant injury or loss of life".
Vehicle examined for clues
The timing coincided with hundreds of revellers leaving nightspots, but police said there was no intelligence to suggest such an attack.
The area was cordoned off by officers who examined the metallic green car, outside an American Express foreign exchange, and then discovered the device.
Deputy Assistant Commissioner Peter Clarke, head of Scotland Yard's counter-terrorism command, paid tribute to those who manually defused it, saying they had not only saved lives but gave forensic officers the opportunity to gather a substantial amount of material.
Officers have appealed for witnesses who may have seen anything suspicious in the Haymarket area. The number is 0800 789 321.
Extra police patrols are taking place across London following the incident.
Whitehall sources said that the police and security services are looking at possible international links - including similarities to car bombs used by insurgents in Iraq.
Device found in Haymarket
Mr Brown said the incident reminds us that Britain faces "a serious and continuous threat" and the public "need to be alert" at all times.
The Haymarket is in the heart of London's theatreland, which is packed with thousands of people through most of the day and night.
Detectives are looking at CCTV footage from the area surrounding the Haymarket and interviewing witnesses, including staff from bars and nightclubs.
Congestion charge cameras, which recognise number plates and run 24 hours a day, will be able to track the route of the vehicle into the capital.
Former head of the Flying Squad John O'Connor said the attacker had most probably "bottled it" and was likely to be a homegrown terrorist.
The Home Secretary chaired an emergency Cobra meeting about the terror scare and then briefed the Cabinet.
Enhanced security measures have been put in place at the Houses of Westminster in the wake of the incident.
The discovery of the car bomb comes just under two years since suicide attacks killed 52 people in the capital.
Another 784 were injured when four bombs exploded on London's transport network on July 7, 2005.