Published Thursday, 20 December 2012
The scene of the security alert in the city centre on Thursday. (© UTV)
A number of items were removed by army bomb disposal experts during searches at a house in the Hawkin Street area of the city on Thursday.
Crews have now left the scene and residents have been allowed to return home.
A 28-year-old man is being held in police custody while another man aged 35, who was detained in Queen's Court, has been questioned and released on bail pending further inquires.
A statement from the PSNI said its investigations are continuing.
SDLP Foyle MLA Mark H Durkan has said that the perpetrators "are only damaging the communities they doubtless claim to support."
He said: "Today, right in the mouth of Christmas, when people are trying to tie up loose ends with work while preparing for the forthcoming festivities, the last thing we need is another security alert in Derry.
"These events only serve to damage our city's economy and disrupt the lives of people trying to make Christmas a happy occasion for themselves and their loved ones in the middle of a dire recession."