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 government's emergency unit Cobra has called a meeting to be chaired by the new Home Secretary Jacqui Smith.
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, believed to be 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.
Police sources have confirmed that gas canisters were involved in the incident, close to Piccadilly Circus.
But Scotland Yard has refused to comment on reports that a large number of nails were found in the car.