Senior police officers have said that the bomb discovered and defused in Central London in the early hours of Friday morning could have caused "significant" injury and loss of life had it gone off.

The unexploded bomb, packed with petrol, gas cylinders and nails, was discovered at 2am in a silver Mercedes parked outside the Tiger Tiger bar and restaurant situated just moments away from Piccadilly Circus.

The Haymarket area of London's West End, normally bustling with tourists, shoppers and theatre-goers, remains sealed off by police while forensic experts continue to look for any evidence that could shed light on who is behind the bomb.

Police are also in the process of clearing people from Hyde Park following reports of another suspicious vehicle and the adjacent Park Lane has been closed. Asked if the latest incident was linked to the explosive Haymarket device, a Scotland Yard spokeswoman told AFP: "Not at this stage."

She told the news agency, however, that London police were operating under "gold control" - the highest command system for police during emergencies.

Prime Minister Gordon Brown reacted to the news of the defused bomb, telling the BBC that Britain faced a "serious and continued terrorist threat". "It does recall the need for us to be vigilant at all times," he said.

Peter Clarke, head of the counter-terrorism unit at Scotland Yard, said that police had received no warning of a bomb attack. He was also unable to speculate on who might have been responsible for the bomb.

He was quoted in an AFP report as saying, however: "Even at this stage it is obvious that if this device had detonated, there could have been significant injury or loss of life."

Clarke highlighted a number of similarities between the latest car bomb and "previous plots", including the defused bomb's location outside a nightclub and its being a vehicle-borne device. He also highlighted the fact that the latest bomb attempt came close to the July 7 anniversary.

It is not the first time that a nightclub has emerged as a possible terrorist target. Five Britons were jailed in April after being found guilty of plotting to carry out al-Qaeda style bomb attacks at various locations across Britain, including London's Ministry of Sound nightclub.

A representative of St James's Church in the heart of Piccadilly said that the defused bomb had not affected the church.