Bomb Designed To Cause Devastation
He said the police told him it was a massive device, with the potential to cause huge loss of life and damage to buildings.
The car containing the explosives was abandoned in area full of theatres, restaurants and nightclubs - allegedly after the driver ran away.
Sky Reporter Emma Birchley explained: "An eyewitness said at around 1:30am this morning the car was driven erratically into some bins which were close to Tiger Tiger, a bar and nightclub in the Haymarket.
"The car crashed. Allegedly the driver got out and ran away.
"Some bouncers from the club then went over to the car to check it out, and that, it seems, is when the device may have been found."
Device found near Tiger Tiger club
She added: "I have just spoken to a freelance photographer who passed the area at around 4am.
"He stopped because the area had already been cordoned off. He said he saw that gas cannisters had been removed from the vehicle, a silver Mercedes, and he could see something large in the back of the car."
Reporting from the scene, Birchley said: "At the moment I can see officers at the other end of the road.
Police cordon off the crime scene
"Right at the top by the cordon is where we have the blue tarpaulin, underneath we believe is the car which forensic officers are looking at in great detail."
Shane Brighton, a counter-terrorism expert, told Sky the device may be linked to Al Qaeda in the wake of Gordon Brown becoming Prime Minister.
He said: "This is highly unlikely to be an Irish device, given the current state of politics there. Al Qaeda tend to go for symbolic timing."
Political Correspondent Joey Jones added: "It underscores the different challenges which Gordon Brown faces having moved into Number 10 from Number 11.
"Whether or not this attempted bombing attack was actually timed to coincide with the arrival of the new Prime Minister and the new administration we can only speculate."