Police sealed off part of the West End after a telephone caller using a recognised codeword warned that several devices had been placed in Regent Street and Oxford Street.
About an hour later, a device was discovered outside the Laura Ashley store at the junction of the two streets and was made safe by bomb disposal experts. An officer from the British Transport Police discovered the device in a black plastic bag containing batteries and wires. Suspect packages were found in two other waste bins, but were found to be false alarms.
Both Oxford Circus and Bond Street Underground stations were closed during the alert, which lasted about three hours.
No organisation claimed responsibility but Commander Tony Rowe, head of central London operations, said it bore the hallmarks of the IRA.
He said: 'We have once again been subjected to a situation which caused massive inconvenience to shoppers, tourists and people working in the area.'
He said the coded message, received at 11.25am, was worded 'in the usual vague way'. The area was reopened at 2.30pm, except for a 200-yard stretch outside Laura Ashley.
The planting of the bomb comes nine days after the IRA planted explosive devices in Brighton and Bognor Regis, concealed on hired bicycles.