Residents were evacuated from their homes before hearing an 'explosion' at around teatime on Tuesday.
Emergency services were called to the Neasham Road area of Darlington some time before 5pm.
A police cordon was put up and traffic was diverted.
Read more: LIVE: Parts of Neasham Road Darlington closed as 'explosion' heard
Residents said they were being told by police a bomb squad from Catterick had been called.
Dianne Carr, who got home from work to find the cordon, said: "I just came from work and there were people out here. I got here about 4.45pm but there are people who had been here longer.
"We were further up then they moved us back.
"The police lady came and told us before the explosion. It was quite loud."
It is understood patrons of the Copper Beech pub and passengers on Arriva buses were also evacuated.
Northern Echo reporter Daniel Hordon, who was at the scene, reported said he heard a 'loud bang' at the TA Centre on the road at 5.41pm.
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Another resident, Ken Richmond, said: “They came around and asked us all to evacuate because there had been a parcel that was not meant to be there.
“They called the bomb disposal squad from Catterick and they arrived.
"There was a robot go in then there was a bang a few minutes ago."
Durham Constabulary has been contacted for further information.
Here are a selection of pictures and videos from our reporter on the scene.
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