A huge manhunt was going on last night for a group of suspected al-Qa'eda terrorists after two car bombs were planted in the West End of London.

	The Mercedes containing explosive material is prepared for removal

The first, a Mercedes filled with petrol cans, gas canisters, and nails, was primed to explode as hundreds of revellers poured out of a nightclub.

The second, another Mercedes, was dumped in the area and its deadly cargo discovered by parking wardens who had towed it - unwittingly - to a car pound. They became suspicious of a strong smell of petrol or gas.

The attempted bombings prompted fears of a new summer campaign by extremists.

The nightclub bomb, outside Tiger Tiger, on Haymarket, was equipped with a "relatively sophisticated" remote-control detonator, to be set off by a mobile phone. It was so powerful that it could have claimed more than 100 lives, police sources said, making it potentially Britain's worst terrorist atrocity.

Bomb disposal specialists defused the device manually but hours later were called to examine the second vehicle, in the Park Lane car park.

	A section of Hyde Park is closed and visitors are escorted to safety by police

Hyde Park, which is adjacent, was evacuated by police, although it was not immediately clear what sort of bomb was involved.

Last night police, who confirmed a definite link between the two incidents, were searching for the drivers amid fears the suspected terrorist may be part of an organised cell of extremist Muslims - which typically number up to five people. There was also widespread concern that other devices may have been planted, although police said they had no such intelligence.

The attacks come at the height of the tourist season with Wimbledon in full swing and on the weekend of the Diana Memorial Concert at Wembley. They appear timed to coincide with Gordon Brown's arrival as Prime Minister and came two years after the July 7 attacks on London. The row over Salman Rushdie's knighthood may also be a factor.

Hours before the bombs were found, a message appeared on the internet, in the al Hesbah chat forum, a Sunni website frequently used by al-Qa'eda and the Taliban to disseminate propaganda. It read: "Today I say: rejoice, by Allah, London shall be bombed". It attacked the author's knighthood. "We, and the whole world has seen what Britain has done ... their intention to honour Salman Rushdie who insulted and slandered Islam."

Security was stepped up at Parliament and extra patrols put on the streets in key areas of central London and across the capital as officers searched for other devices. Several theatres are situated within the security cordon and were waiting last night to see if they could open their doors. Commuters also faced severe problems getting home.

The first incident began at around 1am yesterday when a silver Mercedes was seen by ambulancemen who were treating a young man who fell and hit his head during "ladies night" at Tiger Tiger. They rang the police after seeing fumes coming from the car's boot. Bomb disposal experts discovered cans containing 13 gallons of petrol, a number of gas cylinders and dozens of nails beneath a cover on the back seat and packed into the boot. The bomb resembled the type used by al-Qa'eda to wreak havoc in Iraq.

Officers removed the detonator by hand before using a robot to make the rest of the device safe with a controlled explosion.

	Jacqui Smith: 'What I think is very important is that the public remain vigilant at all times'

It was defused minutes before the four-storey club, which has a capacity of 1,700, was due to close at 2am, potentially causing the largest loss of life of any terrorist attack on mainland Britain.

As it became clear the bombers had escaped, police launched the biggest terrorist manhunt since July 21 2005. They were unsure whether they were seeking individuals or a team.

"We are keeping an open mind but some facts and features resemble recent plots," said Deputy Assistant Commissioner Peter Clarke, the head of the Metropolitan Police Anti-terrorism Command.

He referred to the "gas limos" project of Dhiren Barot, which received approval from the top of al-Qa'eda and the fertiliser plot in which Jawad Akbar suggested targeting "all those slags dancing around" at the Ministry of Sound nightclub in London, adding "none of them can say they are innocent."

Both are in jail but Lamine Adam, who is on the run after being put under a control order, had also allegedly discussed attacking a nightclub.

Mr Clarke called on the public to help be the police's eyes and ears. "The threat from terrorism is real - it is here and enduring. Life must go on, but we must all stay alert to the threat we face, as we go about our daily lives."

Mr Brown said the incident showed that Britain faced "a serious and continuous threat." His new Home Secretary, Jacqui Smith, said: "What I think is very important is that the public remain vigilant at all times."

	Deputy Assistant Commissioner Peter Clarke, head of the Metropolitan Police Anti-terrorism Command

The Government's emergency response committee, Cobra, met before briefing the Cabinet and the threat level from terrorism, set by MI5, was at "severe", one level lower than the highest "critical".

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

"The vehicle was parked in one of the busiest parts of central London in the early hours of a Friday morning when many, many people were leaving nightclubs and other places.

"I think it would be right 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 action prevent injury and damage to property, but it gave us opportunities to gather a great deal of forensic and other evidence from the vehicle."

One of the bouncers at Tiger Tiger said he had alerted the ambulance crew to the car. "I saw smoke coming out of the car and told the ambulance crew who called the police. The club was packed at the time and we had to evacuate several hundred people."

Alastair Paterson, 25, a recruitment consultant, was enjoying a night out in Tiger Tiger. "I have never seen a place empty so quickly," he said, "it was like a ghost town. We were all led out of the building through a side alleyway and through to the back of the building.

	Map of London showing where the two car bombs were found

"At first when I saw the car and smoke coming out from the back we all just thought it was a drink driver.

"It was only when they wouldn't let us back in to get our bags and coats that we realised something more serious was going on. It was then that people started thinking it was a terror attack.

"The consequences could have been disastrous. Thank God I am still alive."

Daniel Weir, 17, said: "When I arrived all four doors of the Mercedes were open and there was a gas canister on the ground by the boot. Police officers were setting up a remote controlled robot and officers were clearing the area."

It is thought the vehicle was taken to the Defence Science and Technology Laboratories at Ford Halstead, Kent, to find out how the bomb was constructed and who may have made it.

In Park Lane, police were said to be checking hundreds of cars in the pound. Ispan Chowdhury, 39, a Masterpark employee, said: "This blue Mercedes came in at 3.15am this morning.

"My colleague told me about it. He said there was something smelling inside. He said it smelt like gas. He said not to take it into the car park and to leave it outside the office. At 1.15pm the police told us to leave the office. They just said, 'Get out of your office and go to a safe place'."

A spokesman for Tiger Tiger said: "We have clear crisis management procedures and act on regular advice from the Home Office, Metropolitan Police, M15 and The Security Industry Authority."