Published Thursday, 30 January 2014
The flags are being displayed from lampposts. (© UTV)
They were erected in Newbuildings on Tuesday in what Sinn Féin has described as an effort to heighten tensions within the community and "create a reaction".
It comes after a similar incident last January when the flag of the British Army regiment was displayed in the Fountain area, overlooking the nationalist Bogside, and other areas.
Most of those flags were subsequently taken down following appeals to unionist leaders.
Michael McCrossan, of Sinn Féin, said: "Given the history of the Parachute Regiment in this city and the upcoming anniversary of Bloody Sunday this weekend the erection of these flags is being seen as provocation in an effort to raise tensions in the Derry area.
"We now need to see leadership from within unionism to ensure that these flags are taken down as those who have erected them obviously did so to create a reaction from within the nationalist community.
"The people who erected these flags are only serving the interests of those opposed to the peace process and heightening community tensions in the city. This is now the time for clear leadership within the unionist community in order to reduce tensions."
Thirteen people died when British paratroopers shot civil rights marchers in Derry in 1972.
The Saville Report, published in 2010, declared all the victims to be innocent and Prime Minister David Cameron apologised in the House of Commons.
Events are due to be held at the end of January to mark the 42nd anniversary of the atrocity.
© UTV News