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Officers carried out a controlled explosion on the device left in the busy Haymarket area of the capital.

"International elements" are believed to be involved, Whitehall sources told the BBC.

The silver Mercedes had been loaded with gas cylinders and has now been removed from the scene, close to Piccadilly Circus.

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.

TRAVEL DISRUPTIONS Piccadilly Circus tube station reopened Haymarket closed between Pall Mall and Piccadilly Circus 16 bus lines diverted in the area with delays of more than 45 minutes Heavy traffic around Trafalgar Square and Charing Cross Rd Coventry St, Whitcomb St, Shaftesbury Ave and Cambridge Circus closed Eye-witness reports

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.

One police source said the bomb was a "big device" and posed a real and substantial threat to the area around Haymarket, which is in London's theatreland.

Dozens of forensic officers examined the scene and the car was removed for further examination.

Scotland Yard said detectives from Counter Terrorism Command were investigating the potential bomb plot and will be checking the CCTV in the area.

INVESTIGATION TIMELINE 0200 BST Police called to suspicious vehicle in Haymarket Area cordoned off while explosives officers examine car Officers find and disable "potentially viable" device Met Police Counter Terrorism Command launch investigation 0400 Witness sees police removing gas canisters from vehicle 0800 Piccadilly Circus Tube station closed 1000 Prime Minister Gordon Brown says the country faces "serious threat" 1025 Car removed from Haymarket All times BST

Police are believed to have also carried out a search of other key areas in the capital shortly after the discovery of the car.

A spokesman said: "Police were called to reports of a suspicious vehicle parked in Haymarket, shortly before 2am this morning.

"As a precautionary measure the immediate area was cordoned off while the vehicle was examined by explosives officers.

"They discovered what appeared to be a potentially viable explosive device. This was made safe."

Police say Haymarket is likely to remain closed for some time and severe travel disruption is predicted.

Piccadilly Circus Tube station is closed and trains are not stopping, while local bus services are being diverted.

The BBC's Daniela Relph, at the scene, said the heart of London was completely closed off and police officers were concentrating on keeping people away.

'No intelligence'

Professor Paul Wilkinson, a terrorism expert, said a passer-by had tipped off the police and officers would be concerned they did not have prior intelligence.

The current terrorism threat level has been classed as severe - meaning an attack is highly likely - since 14 August 2006.

Intelligence sources said they were keeping an open mind on who was responsible for the car bomb.

The BBC's security correspondent Frank Gardner said the incident had "come from nowhere" and that the driver of the car was now Britain's "most wanted".

He added that the police would be in charge of the investigation and that CCTV was the key to finding the "first clue" as to who was behind the attempted bombing.

John O'Connor, former commander of Scotland Yard's Flying Squad, told BBC News the incident bore all the "hallmarks" of a failed suicide bomb attempt. And it was "lucky" the police had received the tip-off .

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