THE British Prime Minister, Mr John Major, last night condemned the Canary Wharf bomb as "an appalling outrage" and said his first thoughts were "with the casualties, their families and the emergency services.
We will pursue relentlessly those responsible for this disgraceful attack," he said.
"Sinn Fein had given assurances time and time again that they were committed to peaceful progress. I now call on the leadership of Sinn Fein and the IRA to condemn immediately and unequivocally those who planted this bomb and any suggestion that the ceasefire is now over.
"It would be a tragedy if the hopes of the people of Britain and Northern Ireland for lasting peace were dashed again by the men of violence. This atrocity confirms again the urgent need to remove illegal arms from the equation.
"For my part, I remain committed to the search for peace in Northern Ireland and will not be distracted from this by terrorism."
Labour leader Mr Tony Blair also condemned the bomb as a "sickening outrage". And he said his sympathy went to the victims.
"There can be no justification whatsoever for a return to terrorism. I call on everyone - including Sinn Fein - to condemn this appalling act.
"All parties must at once return to the peace process and resume the ceasefire. An outrage of this kind simply makes it harder for the Government to continue the peace process, so it is not only callous and unacceptable but counter productive.
A former Northern Ireland minister, Mr Michael Mates, who remains close to developments in the North, said whoever carried out the bombing has made "a huge tactical error".
He said it would not only "attract the opprobrium of the world but it has confirmed all the fears that the British government and the unionists had that the ceasefire was only a ploy for the IRA to get its way and if it didn't get its way it would resort to violence.
"The IRA, or those elements who have perpetrated this, have made a huge tactical error.
"That is why the government was insistent that something had to be done to build confidence in the fact that the peace was to be permanent", said the MP.
"The best interpretation to put on this would be that this is a breakaway part of the IRA and that it has been perpetrated by those who didn't want to go down the road to peace and democracy anyway.
"If that is the case Gerry Adams and Martin McGuinness must denounce, it utterly and comprehensively.
Liberal Democrat leader Paddy Ashdown said: "This is a very grave development. It runs counter to the mood and hopes of the Irish people.
"It's now vital that Sinn Fein condemns this unequivocally and that the people of Ireland make it clear that they want peace, not a return to the conflict."
Dr Mo Mowlam, shadow Northern Ireland secretary, said: "I thoroughly condemn this outrageous act of terrorism. My firsts thoughts are with those who have been injured and with their families."
Tory MP, Mr Peter Bottomley, a former Northern Ireland Minister, said: "Around the world there must be overwhelming disgust and criticism. It does not help and it has to be shown to be counterproductive to terrorists."
The chairman of the Conservative backbench Northern Ireland committee, Mr Andrew Hunter, said: "This is an evil outrage and a very, very sad day because so much has been achieved during the last 18 months and the yearning for permanent peace is so strong.
"Everyone, including Sinn Fein, must condemn this appalling act and do so utterly and unequivocally"
Lord Holme of Cheltenham, Liberal Democrat spokesman on Northern Ireland, said "This announcement may be the result of a dangerous power struggle within the militant republican movement.
"To betray the hopes of peace with more bombs and bloodshed cannot be justified."
Mr William Smith, of the Progressive Unionist Party, said: "I am totally devastated. We had no inkling this was about to happen or even that there was a slight hiccup within the republican movement."
He called on the loyalist paramilitaries to remain calm.
The Church of Ireland primate, Archbishop Robin Eames, also urged the paramilitaries not to use the situation as an excuse to return to violence.
"This is not a time to drive us back into the mayhem and the horror and the nightmare.
"The people of Northern Ireland have seen what peace can do for them and don't want to be sent back."