A woman has been arrested and a man is on the run after the bomb squad detonated a suspected explosive device in Melbourne's east this morning.



A busy shopping strip on Mountain Highway in Bayswater was closed for several hours as police investigated a mysterious package found inside a parked car.

The suspicious items, which police initially believed included a pipe bomb, were found after officers spotted a Toyota Echo with false number plates about 2.30am on Thursday.

The bomb squad was called to Bayswater after a 'pipe bomb' was found in a parked car. Credit:Eddie Jim

When police doubled back to investigate, a man and a woman seen sitting inside the car earlier had run away.