A convoy of lorries, diggers and earth-moving equipment, escorted by police and troops, moved into the city at 6pm to seal off the section of walls which overlooks the Catholic Bogside district.
The move was ordered by the Secretary of State for Northern Ireland, Sir Patrick Mayhew, after a day of talks failed to agree a route for the march. The lack of agreement had increased apprehension, in the city and elsewhere, of impending conflict in the community.
The development has not, however, defused the situation, since it leaves open the possibility of a re-run of the Drumcree stand-off, which last month created dangerous levels of tension and led to intimidation in the province.
Sir Patrick's decision was welcomed by Bogside residents but caused anger among Unionist politicians. Dr Chris McGimpsey, a member of both the Apprentice Boys and the Ulster Unionists, accused the Government of bending to the threat of republican violence. He described the decision as disgraceful but called on loyalists not to react violently.
A Londonderry Democratic Unionist councillor, Gregory Campbell, said it looked as if republican demands were going to be met in full, adding: "If people expect us simply meekly to accept that, then I'm afraid that is just not going to happen. I'm afraid we're not wearing it."
During previous parade controversies Sir Patrick has stressed that operational decisions are for the Royal Ulster Constabulary and not for him. But yesterday he acted under public order legislation. This was in response to RUC advice that to allow a parade along the city walls was likely to make undue demands on the police and Army.
Earlier a group of clergymen, including the local Catholic and Church of Ireland bishops, Dr Seamus Hegarty and Dr James Mehaffey, together with senior Presbyterians, the Rev Robert Davey and the Rev David Latimer, met leaders of the Apprentice Boys and, later, representatives of the Bogside Residents' Association.
Others involved in talks included Social and Democratic Labour Party leader and the city's MP, John Hume, business leaders and senior RUC officers.
Bogside residents and the Apprentice Boys have recently held a series of talks aimed at finding an agreed route. When those talks failed, the Government imposed the ban.
Sir Patrick said, however, that it could be lifted if the two sides reached an agreement before the march.
Mr Hume said he hoped this could yet happen, although he accepted it would be difficult.
The military convoy which moved in last night carried concrete bollards, razor wire and scaffolding. Their intention was to create an impassable barrier to keep the loyalist marchers away from the Bogside.
Sir Patrick said last night: "On an issue of this kind there is widespread condemnation but I believe it to be in everybody's interests.
"The police should not have undue demands placed upon them."
Anti-terrorist detectives in London last night appealed for information about a set of keys to lock-up garages. The call followed a search of garages near a house in Peckham, south London, where last month police recovered components for up to 36 bombs.
Detectives also want to hear from anyone who was telephoned between 1 June and 15 July by a man with a French, American or Irish accent, interested in renting a garage.Reuse content