A 214-metre exclusion zone has been set up as a precaution by the Metropolitan Police, and roads in the area have been closed.
The bomb was found during routine work at the dock which runs alongside the airport's runway.
The Royal Navy attended the scene and confirmed the nature of the device, Scotland Yard said.
The airport has advised all passengers not to travel to the airport and to contact their airline for further information.
In a statement, the Met said: 'The ordnance was discovered as part of pre-planned work at London City Airport and reported to the police at 05:06hrs on Sunday, 11 February.
'The operation to remove the ordnance is ongoing in partnership with our colleagues in the Royal Navy.
'At 22:00hrs an operational decision was made with the Royal Navy to implement a 214-metre exclusion zone to ensure that the ordnance can be safely dealt with whilst limiting any risk to the public.'
Transport for London said the airport was shut and road closures were in place.
'The airport has been closed due to an emergency services incident. There are also additional local road closures due to the incident. Traffic is light in the area.'
It is not yet known how long the airport will remain closed.
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