It is understood a number of masked men had earlier stopped a grey Ford Mondeo car in the Curryneirin area before placing the suspect device on board and ordering the driver at gunpoint to take it to Waterside police station at Richill Park around 10.30 pm.
The driver was able to raise the alarm, and a public safety operation was immediately implemented by police.
The area has been cordoned off while Army Technical Officers examine the object.
In an update this morning, Monday, November 21, police say Crescent Link is closed between the roundabout at Kilfennan Link Road and Altnagelvin Hospital.
A PSNI spokesperson said: “Our officers are on scene and we ask that you follow their direction.
“The security alert continues and, as we work to make the scene safe, a number of homes have been evacuated in the area.
“We want to thank all those impacted for their patience and cooperation, in particular residents who have had to leave their homes as well as local businesses.
“We’d also like to thank local community representatives in helping organise emergency shelter.
“We will update you with further details in due course.”
Superintendent Clive Beatty has acknowledged the significant disruption caused by the operation, but says the safety of the community is paramount.
Superintendent Beatty said: “This reckless and despicable act has brought chaos to the local community in Crescent Link this morning, with many residents having to evacuate their homes.
“Local businesses and a local school are also experiencing disruption this morning.
“This is unacceptable.
“This must have been a horrific ordeal for the driver and we hope he recovers from this traumatic incident.”
Superintendent Beatty added: “We are working to make the scene safe and appreciate the patience and cooperation of the public and, in particular, those who have been directly affected.
“We will keep you updated with any developments.”
Lisnagelvin Primary School has confirmed it will not open on Monday due to the ongoing security operation.
SDLP Foyle MP Colum Eastwood said: “We have been told that a van was hijacked and the man asked to drive the van to the police station.
“What always happens in these situations is that the ordinary people of this city are put at risk by people who have nothing to offer and are trying to tell people they just exist”.
Members of the public are asked to avoid the area.
DUP Foyle MLA Gary Middleton tweeted this morning: “Once again people have been targeted by the disgusting actions of cowards.
“A van hijacked and ordered to Waterside PSNI station. Young children and their families forced from their homes in the middle of the night.
“Schools closed today.
“This will further no cause.
“Disgraceful.”
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