A delivery driver’s car was hijacked by a number of men and a suspicious object placed inside.
A man has been forced at gunpoint to drive to a Londonderry police station, SDLP leader Colum Eastwood has said.
Mr Eastwood said the man’s vehicle had been hijacked before he was ordered to drive to the Waterside police station.
It follows the report of a suspicious object in the Richill Park area on Sunday night.
Lisnagelvin Primary School has confirmed it will not open on Monday due to the ongoing security operation.
Some homes were evacuated overnight and the nearby Irish Street Community Centre opened for residents.
“We have been told that a van was hijacked and the man asked to drive the van to the police station,” the MP told BBC Radio Foyle.
“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.
A number of roads remain closed on Monday morning including Crescent Link and disruption is expected.
Chair of the Irish Street community centre, Niree McMorris, said it had been open since 23:30 GMT on Sunday for those affected.
She said it had been a long night for the families who have been forced from their homes.
“There has been a steady flow of families all night, now we have the Tesco workers waiting to get into their work.”
Older people have slept on chairs, while make shift beds were made for young children, she added.
“People cannot believe this is happening, people who have lived in the area for 20 plus years say they have never seen anything like this,” she said.
The PSNI thanked residents for their patience and cooperation throughout the evacuation.
“We’d also like to thank local community representatives in helping organise emergency shelter,” a PSNI spokeswoman added.