Published Monday, 14 July 2014
Police are hunting three men in connection with the theft. (© UTV)
The flag was removed from the roof of the hall on the Coolafinny Road and replaced with a 32 County Sovereignty Movement flag.
The incident happened at around 11.15pm on Sunday.
It's believed three males may have been involved and were seen leaving the area in a white Seat Leon car, police said.
A spokeswoman added: "Police are treating the theft as a hate crime."
Deputy Mayor of Derry, Alderman Gary Middleton said he was "disgusted at the deeply offensive act".
He said: "I totally condemn this and fear for the community relations in the area.
"This is a very settled community and a lot has been done to help build relations.
"This sort of attack could increase tensions and I would call for calm and for no retaliation."
"We are very tolerant of all cultures in this city and we can't have attacks like this," the DUP representative added.
Across Northern Ireland so much work went into ensuring the Twelfth passed off peacefully but there are still people intent on undoing that good work.
Alderman Gary Middleton
Sinn Féin councillor Paul Fleming also condemned the incident and appealed for the flag to be returned.
He said: "Flags and symbols should be treated with respect and the theft of this flag must be condemned.
"We want to create a culture of tolerance and actions like this do nothing to contribute to that.
"This is no different to the destruction of tricolours on loyalist bonfires.
"I hope this will not do anything to raise community tensions in the area and I would appeal for the return of this flag to its owners."
Anyone with information is asked to contact officers at Strand Road police station on the non-emergency number 101.
© UTV News