The police said the “unexploded ordnance was discovered as part of pre-planned work” in the River Thames at George V Dock on Sunday night.
Special officers and Royal Navy experts decided to close the airport and all flights today have been cancelled.
The airport is undergoing a £370m development programme overseen by Bechtel.
Robert Sinclair, CEO of London City Airport said: “The airport remains closed this morning following the discovery of a World War Two ordnance in King George V Dock on Sunday.
“All flights in and out of London City on Monday are cancelled and an exclusion zone is in place in the immediate area.
“I urge any passengers due to fly today not to come to the airport and to contact their airline for further information.
“I recognise this is causing inconvenience for our passengers, and in particular some of our local residents.
“The airport is cooperating fully with the Met Police and Royal Navy and working hard to safely remove the device and resolve the situation as quickly as possible.”