Officers defused the first, found in a green Mercedes parked outside one of London's biggest nightclubs, the cavernous Tiger Tiger, at around 1 a.m. (midnight GMT), when hundreds were packed inside for "Sugar 'n Spice Ladies Night".

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

They later found similar materials in a blue Mercedes that had been parked nearby. They said it contained gas, fuel and nails that could have been detonated and that the two cars were obviously linked.

Authorities said they did not know who left the bomb but they had begun a counter-terrorism investigation. The alerts came less than two years after Islamist suicide bombers killed 52 commuters on London transport.

"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, said of the first car.

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

The ringleader of that plot, Dhiren Barot, was convicted last year. Another group of Islamic radicals were convicted this year in a plot targeting a big nightclub and other sites.

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

"We are currently facing the most serious and sustained threat to our security from international terrorism," Jacqui Smith, Brown's new interior minister, said after the meeting, which she chaired in her first day on the job.

A large area around the scene on central London's Haymarket street, near Picadilly Square, was sealed off during the day.

Television pictures showed a gas canister after it had been removed from the car. It was green and labelled "PATIO GAS", which is readily available at hardware stores in Britain.

AL QAEDA LINK?

Explosives officers also found "significant quantities" of petrol and a large number of nails in the cars, officials said. Sky News said the first device was rigged to detonate with a mobile-phone trigger, but police would not confirm that report.

Britain has experienced an increase in terrorism-related threats since the September 11 attacks on the United States and since it joined forces with U.S. troops to invade Iraq in 2003, an event that provoked widespread domestic criticism.

Brown has pledged to respect Britain's commitments in Iraq, although there has been speculation he may accelerate the British troop withdrawal.

Intelligence sources said they could not rule out an al Qaeda link to the car bomb, and said the danger of international Islamist terrorism was the main reason Britain's threat level is placed at "severe", the second highest rating.

"We're following up lots of leads and hopefully making some progress, but we're still keeping quite an open mind," a security source said.

"The balance of probability does lie pretty strongly with international terrorism," the official said, referring to al Qaeda-inspired radical Islamism.

Brown said the incident showed the need for vigilance.

"The first duty of a government is the security of the people and as the police and security services have said on so many occasions, we face a serious and continued security threat to our country," he told reporters.

Security around parliament was stepped up, with police body-searching the drivers of cars entering the compound. Across town security was tightened at the Wimbledon tennis championship.