The PSNI say the device had already detonated when it was found by the child, but warned that the incident shows the “blatant disregard” by those who left the bomb in the area.
The incident happened at the Curlew Way area of the Waterside yesterday evening.
DUP Foyle MLA Gary Middleton said the boy was only six-years old.
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“People are angry that somebody would take it upon themselves to leave a dangerous device that’s designed to injure, to kill, in this area,” he said. “That’s disgraceful.
“When the six-year-old boy discovered the device it appeared that it had already exploded and that was confirmed by police. But obviously this could have ended in a case where someone was seriously injured or kill.
“That’s something that we just cannot tolerate. The entire community will be angry and I know that this will cause some concern because it’s not the first time a pipe bomb has been left in that general vicinity over the last number of months.”
Mr Middleton added: “This could have been anyone’s child.”
A spokesperson for the PSNI said: “Detectives in Derry/Londonderry are investigating after the discovery of a pipe bomb-type device in the Waterside area of the city last night, Tuesday 20 May.
“Police received a report shortly before 9:55pm that earlier, around 6pm, a young boy had lifted the remains of the device from the garden of a house in the Curlew Way area.”
Detective Inspector Michael Winters said: “Our enquiries are at an early stage, however, it appears at this time the device had detonated prior to it being lifted by the young boy.
“While this was not a live device, the fact a young boy found it and lifted it shows the blatant disregard by those responsible for leaving it there. It was completely reckless.
“I want to appeal to anyone who has information about this to contact detectives at Strand Road on the non emergency number 101, quoting reference number 2084 of 21/05/19.”
Alternatively, information can also be provided to the independent charity Crimestoppers on 0800 555 111 which is 100% anonymous and gives people the power to speak up and stop crime.
Detective Inspector Winters added: “I also want to take this opportunity to remind the public if anyone comes across anything suspicious, please call police immediately.”
The Chair of the Derry and Strabane Policing and Community Safety Partnership, councillor Sandra Duffy, said: “This attack must be condemned by us all. The pipe bomb detonated in a built up residential area of the Waterside yesterday. PSNI has advised that the remains of the device was then lifted by a young boy. This type of activity has no place in our city and should not be tolerated.
“It is clear that whoever carried out the attack had absolutely no concern for people living in the area and their only aim is to try and exert coercive control of the people residing there. I would urge anyone with information about this reckless attack to contact the PSNI or Crimestoppers immediately.”
Sinn Fein councillor Christopher Jackson said: “The fact that the remains of this device were picked up by a child is shocking and shows what could have happened if anyone had been in the area when it exploded.
“Those responsible for this pipe bomb attack have nothing to offer the community and need to end these actions immediately.”
He added: “Anyone with any information on those responsible should bring it forward to police.