Lyra McKee, 29, was covering violence in the city’s Creggan district on Thursday night, which saw cars set on fire and police vehicles hit with petrol bombs and fireworks.
Republican terrorist group the New IRA is believed to be behind the shooting, as well as a car bombing that struck Derry in January and a parcel bombs sent to targets on the British mainland.
Officers said they were aiming to disrupt dissident republicans ahead of this weekend’s commemoration of Irish independence.
Footage showed people gathering to watch forensic officers enter homes, before the police came under attack.
“Violent dissident republicans are planning attacks in this city and we were carrying out a search operation in Creggan,” said Assistant Chief Constable Mark Hamilton.
“The searches were being carried out because we believed that firearms and explosives were being stored in the area.
“We believe that dissident republicans have a number of attacks planned and we assess it is likely that these would have been used over the Easter period.
“As we began those searches just after 9pm a crowd gathered and before long upwards of 50 petrol bombs were thrown at officers.”
Police said more than 50 petrol bombs were thrown at officers, as well as fireworks and bricks, and vehicles were hijacked and set on fire.
By the time of the shooting, there were an estimated 100 people on the streets in the area.
Republican Twitter accounts supporting the violence described police as “British crown forces” and characterised the search operation as an “incursion”.
Creggan, a large housing estate on the outskirts of Derry, saw frequent attacks on the British Army during the Troubles and was controlled for a period by the IRA.
Recent years have seen regeneration projects carried out but a recent report by the Institute for Conflict Research found that sectarian violence and vigilantism persists.
Police believe that the gunman was targeting police and accidentally hit the journalist, who was standing next to an armoured vehicle.
In footage from the scene, at least two gunshots could be heard followed by screaming.
One clip, apparently filmed on a member of the public’s phone and shared on social media, appeared to show the gunman opening fire.
The figure, dressed in dark clothing and with their face covered, could be seen firing around the corner of a wall in view of numerous witnesses who were standing just metres away.
They fled as a second figure appeared to crouch to the ground to pick up bullet casings and other potential evidence.
Leona O’Neill, a freelance journalist, was also among reporters in Creggan and filmed cars being set on alight and fireworks and petrol bombs being thrown at police minutes before the shooting.
“I was standing beside this young woman when she fell beside a police Land Rover tonight in Creggan,” she wrote on Twitter. “I called an ambulance for her but police put her in the back of their vehicle and rushed her to hospital where she died. Just 29 years old. Sick to my stomach tonight.”
Mr Hamilton said: “At 11pm a gunman appeared and fired a number of shots towards the police and a young woman, Lyra McKee, was wounded.
“She was taken away from the scene in a police Land Rover to Altnagelvin Hospital but unfortunately she has died and we have now launched a murder inquiry here in the city.
“We believe this to be a terrorist act, we believe it has been carried out by violent dissident republicans.
“Our assessment at this time would be that the New IRA are most likely to be the ones behind this and that forms our primary line of inquiry.”
But Saoradh, a dissident republican group that has denied links to the IRA, issued a statement claiming a “Republican Volunteer” had opened fire while “attempting to defend people from the PSNI/RUC”.
Characterising the police searches as an “attack” on republicans, the statement said: “The inevitable reaction to such an incursion was resistance from the youth of Creggan. The blame for last night lies squarely at the feet of the British Crown Forces, who sought to grab headlines and engineered confrontation with the community.
“During this attack on the community, a Republican Volunteer attempted to defend people from the PSNI/RUC. Tragically a young journalist covering the events, Lyra McKee, was killed accidentally while standing behind armed Crown Force personnel and armoured vehicles.
“This outcome is heartbreaking and we extend our sincerest sympathy to the family, friends and loved ones of the deceased.”
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