A bonfire festooned with flags and abusive placards about the soldier being prosecuted for murders on Bloody Sunday is being treated as a hate incident.
Parachute Regiment material was placed all over the pyre before it was ignited on Thursday night in Londonderry’s nationalist Bogside estate, close to the scene of the 1972 shootings.
Union and loyalist flags were also put on the fire.
The Police Service of Northern Ireland (PSNI) in Foyle said they were treating the matter as a “hate incident”.
“We are receiving a number of reports regarding offensive material on the bonfire in the Bogside area of the city,” it said.
“As a police service we recognise the hurt and frustration that this can cause. The display of this material has been perceived as offensive and distasteful.”
In a post on Facebook, PSNI Foyle added: “Where crimes have been committed and suspects identified they will be brought before the courts.”
Hundreds of onlookers watched as the bonfire, which is torched every August, went up in flames.
A number of fire engines attended and doused a nearby building with water to ensure it did not catch light.
A veteran paratrooper, known as Solider F, is facing prosecution for two murders and four attempted murders on Bloody Sunday.
Thirteen civil rights demonstrators were killed when paratroopers opened fire on crowds in Londonderry in January 1972 in what was one of the most notorious incidents of the Troubles.
The case of Soldier F, which is due to reach court for the first time in September, has become the subject of intense controversy in Northern Ireland and beyond.
Loyalists have been using the Parachute Regiment symbol to show support for Soldier F.
The lighting of the bonfire comes days after a loyalist flute band was accused of insensitive behaviour after taking part in a loyal order parade through Derry on Saturday wearing uniforms carrying the regimental insignia and the letter “F”.
Police have sent prosecutors a report on the actions of Clyde Valley Flute Band, from Larne, to assess if members were guilty of provocative conduct.
A bonfire is torched on August 15 in Londonderry every year to mark a Catholic feast day celebrating the assumption of the Virgin Mary into heaven.
However, in recent times the fire, built by local youths, has become a source of contention and associated with anti-social behaviour.
Police monitored the final construction of the bonfire from a distance on Thursday, using cameras on high poles to capture scenes as hooded youths placed material about Solider F on the fire..