Passengers have been advised not to travel to the airport until further notice, according to a statement on the London City Airport's website.
As experts worked to move the unexploded ordnance, the airport was shut down and a 214m exclusion zone was initially imposed which prompted the evacuation of up to 500 residents.
The airport adjoins George V Dock, where an unexploded bomb was found early on Sunday morning during work to expand the Docklands hub.
Undetonated bombs are common in parts of London.
Mr Sinclair said: "All flights in and out of London City on Monday are cancelled and an exclusion zone is in place in the immediate area".
Mayor of London Sadiq Khan said on Twitter that the Metropolitan Police and the Royal Navy were working in conjunction to remove the bomb.
More than 70 years after a bomb was dropped on London, its discovery has prompted authorities to cancel flights all day at London City Airport.
Robert Sinclair, the airport's chief executive, said: "I recognise this is causing inconvenience for our passengers, and in particular some of our local residents".
At about 10pm last night, Met Police and the Royal Navy made a decision to implement a 214-metre exclusion zone around the airport. Passengers are being urged to contact their airlines.
The device was found at George V Dock during work at London City Airport on Sunday morning.
The issue is also not unique to London - as NPR's James Doubek reported, last August 70,000 people evacuated in Frankfurt, Germany, to allow authorities to defuse a British World War II-era bomb.
In a statement, Scotland Yard said: 'The device has been examined by Met Police and Royal Navy dive teams and is confirmed as being a 500kg tapered-end shell, measuring approximately 1.5m.