Residents were evacuated from their homes in Newry last night during a security alert.
A suspicious object was reported to police in the Violet Hill Avenue area of the city on Sunday afternoon.
The PSNI's Inspector Ryan Moore said last night that the incident was ongoing.
"It follows a report to police at approximately 3.45pm today of a suspicious object in the area," he said.
"A small number of homes have been evacuated and cordons are in place in the Violet Hill Avenue area, including at the junction of College Gardens.
"No main roads have been closed at this time.
"I want to thank the community for their patience as we work to make the area safe."
Charlie Casey, a local Sinn Fein councillor, said that a controlled explosion had been carried out by Army bomb disposal experts.
"I've been told it looked like an elaborate hoax, but you can't take any chances," he said. "It's very disruptive for local people, especially on a Sunday night."