The discovery of a suspected bomb triggered the evacuation of the area around the US embassy in downtown Oslo on Tuesday but it turned out to be a fake, police said.
"A group of bomb disposal experts from the Oslo police district has removed the object and observed that it is an exercise bomb," police said in a statement.
"The car has been used for internal exercises at the embassy and the discovery of it can be connected to that," it said.
Police said earlier that it resembled a bomb and was spotted in a vehicle near the embassy, which is across the street from the royal palace, a magnet for tourists.
The area was evacuated for about an hour and a half as police cars, ambulances and firetrucks swarmed to the site, as well as bomb disposal experts.
The palace was not evacuated but halted entries, a spokesman told AFP, adding that no royals were in residence.
Security was stepped up considerably in Norway after attacks last year by right-wing extremist Anders Behring Breivik that claimed 77 lives.
On July 22, 2011, Breivik set off a car bomb outside government buildings in Oslo, killing eight people, before going to Utoeya island, northwest of the capital, where he shot and killed another 69 people, mostly teenagers.
The US embassy plans to move soon to a site on the outskirts of Oslo for security reasons.