British police found two car bombs packed with fuel, gas canisters, and nails in London's teeming West End theater district on Friday, averting attacks that echoed an earlier al-Qaida plot that could have killed hundreds.

Officers defused the first explosive device, found in a green Mercedes parked outside one of London's biggest nightclubs after midnight, when hundreds were packed inside.

The police, alerted by ambulance workers who thought they saw smoke inside the car, defused the bomb.

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They later found similar materials in a blue Mercedes that had been parked nearby. They said the second device contained gas canisters, fuel and nails that were"potentially viable" and "clearly linked" to the device uncovered earlier in the first mercedes.

Authorities said they did not know was behind the attempted bombing, but announced they had begun a counter-terrorism investigation.

"It is obvious that if the device had detonated there could have been significant injury or loss of life," said Peter Clarke, head of London's anti-terrorist police.

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

He said there were similarities between Friday's incident and an earlier plot, uncovered in 2004, in which an al-Qaida militant planned to detonate gas-fuelled bombs inside limousines in London and other cities.

"It might also have echoes of another recent plot to attack targets including a high-profile nightclub," Clarke said.

Prime Minister Gordon Brown, facing a major challenge two days after succeeding Tony Blair, convened Britain's top security committee, Cobra.

A large area of central London around the scene remained sealed off hours after the bomb was found.

Television footage showed a gas canister after it had been removed from the car. It was green and labeled "PATIO GAS", which is readily available at hardware stores in Britain. Explosives officers also found "significant quantities" of gasoline and a large number of nails in the car, Clarke said.

Hours later, police closed a major road on the edge of Hyde Park following reports of an additional suspicious vehicle.

'We are currently facing the most serious and sustained threat to our security from international terrorism," Smith told reporters after the emergency meeting. "This reinforces the need for the public to remain vigilant to the threat we face at all times."

Sky News later reported that Fleet Street in central London had also been closed off after a third suspicious vehicle had been found.

Newly appointed Justice Secretary Jack Straw said the government had been told about the bomb much earlier on Friday morning. The security services "should be allowed to get on with their job with public confidence," he told BBC radio.

A London Transport spokesman said Piccadilly was closed and some bus services were also affected.

The Haymarket is usually thronged with Londoners and tourists. It is close to Piccadilly Circus in an area packed with theatres, restaurants and pubs.

Fifty two commuters were killed by bombs on London's transport system on July 7, 2005, the first Islamist suicide bombings in western Europe.