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Police were tonight investigating a second car bomb in London.

Deputy Assistant Commissioner Peter Clarke, head of the Met's counter-terrorism command, confirmed a "very similar" device to that found in the West End in the early hours of this morning had been discovered.

The bomb was found after officers were alerted to a suspicious blue 280E model Mercedes in an underground car park off Park Lane, near Hyde Park.

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Mr Clarke said the vehicle had been towed to the car park in the early hours of this morning after having been found parked illegally just yards from the spot the first car bomb had been set outside a nightclub on Haymarket near Piccadilly Circus.

The first device, also planted in a Mercedes, was discovered by chance when an ambulance crew working in the area noticed smoke coming from the car shortly before 2am.

Around half an hour later traffic wardens issued a ticket to the second Mercedes on Cockspur Street and arranged for it be be towed to the holding car park near Hyde Park.

After the alarm was raised over the second car an area stretching from Marble Arch to Hyde Park corner was closed off and nearby buildings evacuated while officers examined it.

Mr Clarke said: “This second vehicle has been examined during the course of this afternoon and earlier this evening, by Metropolitan Police Explosives Officers.

“The vehicle was found to contain very similar materials to those that had been found in the first vehicle in Haymarket earlier today. There was a considerable amount of fuel, and gas canisters. As in the first vehicle, there was also a substantial quantity of nails.

“This, like the first device, was potentially viable and was made safe by the Explosives Officers.

“The vehicles are clearly linked."

Mr Clarke added: "We are doing everything possible to protect the public. There will be more police patrols. The investigation is moving ahead.

“The discovery of what appears to be a second bomb is obviously troubling, and reinforces the need for the public to be alert."

The discovery came after large parts of London were brought to a standstill by terror alerts after police defused the first car bomb. It had been packed with nails, gas canisters and containers of petrol.

Other alerts saw further roads around the capital closed down.

The day of chaos began when police were called to the Tiger Tiger nightclub on Haymarket.

Inside the car officers discovered "significant quantities" of petrol, believed to be 60 litres, plus nails and gas cylinders. They used a remote-controlled device to check the vehicle, which was parked in Haymarket, before bomb squad officers made it safe.

It is understood that an explosives officer had risked his life by entering the vehicle and pulling out a trigger that would have allowed the bomber to detonate the device by mobile phone.

If the device had exploded, Mr Clarke said, the shrapnel would have killed or injured anyone within a wide area, causing "significant" loss of life. Experts said that the bomb could have caused a fireball as big as a house followed by a large shock wave, potentially claiming even more lives than the suicide bomb attacks of July 7, 2005, in which 52 innocent people were killed.

"It is obvious that if the device had detonated there could have been significant injury or loss of life," Mr Clarke said.

The incident came on Gordon Brown's second full day in 10 Downing Street, marking his first real test as Prime Minister. Mr Brown, who has promised to step up the battle against domestic terrorism, hosted a Cabinet meeting today and said before the session that he would remind his ministers that "vigilance must be maintained".

Mr Clarke, the Scotland Yard anti-terror chief, said: "The police were called and Metropolitan Police explosives officers went to the scene and examined the car.

"In the car they found significant quantities of petrol together with a number of gas cylinders.

"I cannot tell you how much petrol, because we have not had a chance to measure it but I can tell you that it was in several large containers. There were also a large number of nails in the vehicle.

"It is appropriate for me to pay tribute to the courage and skill of the explosives officers who manually disabled the device - and in so doing not only did their actions prevent injury and loss of property, but has given us the opportunity to gather forensic evidence."

The area directly around the bar was closed off all morning by officers as they checked the vehicle, which was later taken away for further examination. Piccadilly Circus station was also closed, although it was open again by lunchtime.

The discovery of two substantial car bombs underlined fears the security authorities have expressed for a long time, that terrorists would pack a vehicle with explosives and go for a mass-casualty attack.

When senior Whitehall officials warned two years ago that terrorists would one day try to detonate a chemical, biological or radiological device, MI5 made it clear that the gravest threat would still come from terrorists driving a truck bomb into London.

Earlier this month security spot checks were introduced on petrol and chemical tankers, cement mixers - and other vehicles that could be used by suicide bombers - on key routes into London.

That reflects increasing concern that UK terrorists might copy tactics used to deadly effect by insurgents in Iraq. Bombers in Baghdad have blown themselves up in hijacked petrol tankers and, in at least three attacks this year, have used chlorine gas canisters in lorry bombs.

An al-Qaeda terrorist convicted last year had been planning vehicle-borne bomb attacks in London when he was arrested. Dhiren Barot pleaded guilty to plotting a series of attacks, including detailed plans to pack stretch limousines with gas cylinders and explosives and detonate them in car parks beneath hotels or office blocks.

But security sources acknowledged today that there had been no "predictive intelligence" indicating that a planned attack on this scale was imminent.

As a result, the threat level had remained at "severe" which, although it is the second highest state, does not suggest that a specific plot to launch an attack on a certain day had been uncovered.

The "severe" threat level - indicating an attack is "highly likely" - was imposed in August 2006 and was briefly raised to "critical" when an alleged plot emerged to blow up aircraft taking off from Heathrow.

The security sources said that the latest plot looked "most likely" to involve an Islamic terrorist because of the potential scale of the casualties that would have occurred had the bomb detonated.

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