Police in Times Square neutralized an explosive device discovered inside an SUV Saturday night, after evacuating thousands of tourists from the area.

The search is now on to determine who planted the device and why.

Inside the vehicle authorities found three propane tanks, two five-gallon containers filled with gasoline, fireworks, and two clocks with batteries.

“We’re very lucky," said Mayor Michael Bloomberg, who rushed to the scene from the White House Correspondent's Dinner in Washington, D.C. "Thanks to alert New Yorkers and professional police officers, we avoided what could have been a very deadly event."

Bloomberg, speaking to reporters one block away from where the vehicle was discovered, warned of the dangers of terrorism – but did not specifically characterize the incident as an intended international terror attack.

Following the discovery of the device, police shut down a portion of Times Square and evacuated 45th Street between Seventh and Eighth avenues. Authorities also evacuated a portion of the Marriott Marquis Hotel at Broadway and 46th Street and the Westin at 43rd and Eight Avenue, and patrons were escorted out of several Broadway theaters and restaurants.

The device was discovered at around 6:30 Saturday evening in an idling Nissan Pathfinder near the corner of Seventh Avenue and 45th Street by a street vendor, who then alerted a mounted New York City Police Department patrolman.

Firefighters were called to the scene, where they discovered a smoking package inside the SUV. Bomb squad officers arrived soon after.

Witnesses in the area reported hearing a loud bang emanating from the vehicle at around that time, but it appears there was no sizeable explosion.

A police spokesman said later that the device "appeared it was in the process of detonating, but it malfunctioned."

Once the area was cleared, authorities used a remote-controlled robotic vehicle to neutralize the device and then begin the process of dismantling it.

Once the situation was stabilized sometime after midnight, the robot was withdrawn and specially-protected members of the bomb squad worked to remove the remaining material from the vehicle by hand.

Police also recovered a black metal box resembling a gun locker.

According to the NYPD, the vehicle's VIN number had been removed and the car's license plate did not match its registration. Officials said an investigation was underway to determine who abandoned the vehicle and why.

Throngs had flooded the Times Square area Saturday evening to take in the warm weather.

"I saw a big flash light and a big bang and everybody panicked," said one tourist. "And I ran away."

Governor David Paterson, in a statement released early Sunday morning, said, "We owe an incredible debt of gratitude to the heroic actions of the New York City Police Department and to a single vigilant New Yorker who identified a suspicious vehicle near Times Square in New York City. Luckily, no one is hurt, and now the full attention of city, state and federal law enforcement will be turned to bringing the guilty party to justice in this act of terrorism."

President Barack Obama was briefed on the case, and White House spokesperson Nick Shapiro said Obama has ordered his counterterrorism adviser to assist New York officials and that the federal government was prepared to offer its support on the issue.

This is not the first time in recent years that there was an explosion in Times Square. In March 2008, a military recruitment center was damaged by an explosive device.

No suspect was ever identified or arrested.

The mayor said there is no indication this incident was related.