AN exclusive area of London was rocked by an explosion last night moments after a coded message, reported to be from the IRA, was passed to a news agency.

Anti-terrorist police, who rushed to the scene and sealed off a large residential area of Earls Court, were searching the area following the warning call when the explosion happened.

Scotland Yard said the coded warning gave no precise location or time.

The blast took place in an empty house at The Boltons, one of the most exclusive areas in London with houses costing millions of pounds. The street is filled with millionaires and diplomats and many Arab royal families own houses in the area.

The house was undergoing renovation.

Police said that there were no injuries and there was little damage at scene.

Mr Mark Thatcher, son of the former Prime Minister, and the ruler of Abu Dhabi are among recent residents, a servant of one household said. The man said: ``You have to be a multi-millionaire to live here. Mark Thatcher lived there until about a year ago and the ruler of Abu Dhabi has a house there but I don't think he is in England at the moment.''

He said the large house damaged by the device was being converted into luxury apartments. It is situated opposite a primary school.

A coded warning was received at 9.42pm and the explosion happened 12 minutes later as officers searched The Boltons, said a Scotland Yard spokesman.

``It was quite lucky there were no injuries given that our officers were already there. This could have been worse,'' he said.

There was no evacuation because officers feared people might be more vulnerable to a blast if they left the protection of their homes.

The spokesman refused to say where the coded warning was received or whether a code word was used, but it is understood Scotland Yard was treating the explosion as the work of the IRA.

A spokeswoman for Associated Press said the warning used a code word that they now understood to be linked with the IRA.

The agency rang police immediately.

Neighbours told how a flash of blue light lit up the night sky.

Mexican student Hector Castro, 20, said: `There was a big flash of light for about three seconds. You could hear windows smashing. People in the street looked scared and dived to the floor.

``Some windows were shattered and it rattled window panes in the next street.''

Ms Carolyn Seymour, who lives in Gledhow Gardens, said: ``There was a vast explosion that shook the house. The windows almost came in. I was just about to watch News at Ten.

``I didn't know what it was but I just knew it probably wasn't a gas explosion.''

Police sealed off an area about half a mile around the scene and warned residents to stay indoors for fear of a second explosion.

A London Ambulance spokesman said three ambulances were standing by while police checked the premises.

Three fire engines were on alert at the scene.

Mr Richard Hallan-Baker, 20, of Collingham Road, lives about 150 metres from the scene of the blast. He said he had heard the loud bang and came out of his flat.

``I can't believe it. You never expect anything like this to happen so close to you. It doesn't make sense,'' he said.

In the street he saw four police cars and two ambulances drive to the scene but was prevented from getting any closer by officers. One told him it was believed a bomb had gone off in a flat in The Boltons.

Mr Allan Williams, 27, whose fourth floor flat in Regents Court Hotel looks out on to the scene just 70 metres away, said he heard a very loud bang.

``I'm just waiting now to see what it's all about. We've been told there was a bomb.''

Mr Salvatore Pittella, a chef who works at the Vingt-Quatre Restaurant, Fulham Road, was off duty when he heard the blast while downstairs dozens of diners were unaware of the incident.

He said: ``I was relaxing when there was this huge explosion.''

``I was curious but thought it was a bomb and when I went down to the street police were

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arriving and blocking the roads. They said it was a bomb in a place called The Boltons.''

Mr Greg Larsen, from Christchurch, New Zealand, who was on duty in the restaurant said: ``The first we knew was when the police motor cycles pulled up with blue lights flashing.''

The IRA signalled the end of its ceasefire in dramatic fashion with the bombing of South Quay in London's Docklands on February 9.

The explosion of a massive bomb hidden aboard a low-loader lorry killed two people and injured many more.

Initially there were hopes that the Docklands bombing would prove a one-off attack and that the terrorists would step back and gauge the impact on the political process before launching further operations.

But those hopes were shattered just days later, on February 15, a 5lb Semtex bomb was left in a holdall in a telephone box in Charing Cross Road, central London.

That device was made safe and no-one was injured. However, its discovery brought a large part of London to a halt.

On the evening of February 18, IRA man Edward O'Brien was blown up and killed by his own bomb when it accidentally detonated and ripped apart the bus he was travelling on as it passed along Aldwych in central London.

The inquest into his death heard that the IRA was planning a massive bombing campaign in London.

In the early hours of March 9, what was described as a ``small, improvised device'' exploded in Old Brompton Road, Fulham, west London, causing minor damage. The IRA later acknowledged the device was one of theirs.

Last night's explosion occurred a day after the Government published legislation for elections in Northern Ireland intended to pave the way for all-party talks in June.

Sinn Fein has been told it would be excluded from the talks if the IRA did not resume the ceasfire.

Speculation had been growing about a renewed IRA ceasefire in the run-up to next month's election.

Former Irish Prime Minister Albert Reynolds, who had been instrumental in bringing about the peace process, said he believed the IRA would reconsider its position, particularly if all-party talks went ahead without preconditions.