Several petrol bombs have been thrown at police during what's been described by the SDLP leader Colum Eastwood as a night of 'serious disorder' in Creggan.
The PSNI came under attack on Monday while dealing with a security alert in Creggan Heights.
The PSNI said they were continuing a complex policing operation following the discovery of a suspicious object.
Police said they were in the area as part of a "planned operation targeting the violent activities of the New IRA."
Around 15 houses were advised to evacuate with council and community partners providing rest centres for those residents displaced from their homes.
Mr. Eastwood said: "Police officers came into Creggan today to take bombs out of the hands of those who are trying to murder innocent people in our communities, like those responsible for the mortar in Strabane.
“The brutal and sustained attack that officers have come under while trying to make our community safe is disgusting.
"Young people in this community are being manipulated and are risking their futures as a result. I would urge parents to contact their children and take them out of harm’s way.
“People in this community will not be held to ransom by those who want to hold us all back.”
Assistant Chief Constable for District Policing Mark Hamilton said: “This is a complex operation which is expected to continue throughout the night and we have advised those residents who have left their homes to make alternative arrangements.
"We recognise the upheaval this has caused and we are grateful for their co-operation and understanding.
"The focus of this operation is ensuring the people of Creggan are safe however it is concerning to see significant numbers of young people on the streets, late into the night, throwing petrol bombs and other missiles at officers in the area.
"The reality is this type of disorder contributes to the complexity of the policing operation and presents a real risk of injury to those involved.
"Already we have seen two incidents this evening where young people have sustained burn injuries as result of engaging in disorder.
“I would reiterate our appeal for those young people to return home and remove themselves from the situation.
"We are grateful for the support of community representatives in helping to reduce tensions and providing space for officers to carry out the necessary work to ensure this object does not present a risk to the people of Creggan.”
Sinn Féin MLA Karen Mullan said: “A security alert has been underway in part of Creggan estate from Monday morning.
“This has caused significant disruption in the area resulting in residents being forced to leave their homes and roads are closed.
“I have been on the ground with Councillor Tina Burke and local community workers to assist families with alternative accommodation.
“There have been disturbances in the area tonight.
“There is absolutely no justification for the actions which serve no purpose other than to put people at risk of serious harm and make the situation worse for local residents trying to get on with their lives and they should stop now.”