Muhammad (salAllahu alayhi wasalam) is recorded to have recommended the recitation of this du'a in prayer if a major disaster or difficulty befalls on the ummah, and the menace and terror of the enemy has overcome them. al-Nazila means 'great calamity'. Traditions reveal that this prayer was recited during worship by the Holy Prophet (salAllahu alayhi wasalam) and his illustrious companions (God be pleased with them) at critical times, they offered this prayer especially during morning worship. It is asking Allah to give relief to the Muslims by lifting the calamity. It is recommended to be recited especially in the coures of the dawn (Fajr) prayer.

How is it done?
The Qunut al-Nazila (calamity supplication) is only performed in the fajr prayer, after the ruku, ideally without raising one's hands. In such a qunut, only, one would say amin quietly (without raising one's voice).

There is no qunut in any other prayer, or in the fajr prayer if it is not for a calamity. As such, one would not even say amin here, for it is not established that the Prophet (Allah bless him and give him peace) did so. He only did the qunut for a calamity, and only in the fajr prayer, and this is considered something exceptional. It is an established principle of fiqh that rules deduced by analogy from exceptions; analogy (qiyas) may be used only with normal cases.
(source: sunnipath.com)



Translation:
O Allah! Guide me among those You guide. Grant me health and pardon among those You grant health and pardon, look after e among those You look after, grant me grace in what have given me, and protect me from the evilof what you have ordained; for You decree and none decrees against You, and none is abased whom You befriend. And none is exalted whom You are at enmity with. O our Lord, who is above all things sacred and exalted, all praise is Yours for what you decree. I ask Your forgiveness and turn to You in repentance

اللهم اهدنا فِيمن هدَيْت، و عافِنا فِيْمنْ عافَيت، و تَوَلَّنَا فِيْمَنْ تَوَلَّيت، و بارك لَناَ فِيْما أعطَيْت، و قِنَا و اصْرِفْ عنّا شَرَّ ما قَضَيْت، فَإنَّك تُقْضِى عَلَيْك، إنّهُ لا يذ~لُ مَنْ ولَيْتَ و لا يَعِزُ مَنْ عادَيْت، تبارَكْتَ رَبّنا و تَعالَيْت، لك الشُكْرُ عَلَى ما أعْطَيْت، نَسْتَغْفِرُك اللهُم مِنْ جَمِيْعِ الذُنُوبِ و الخَطايا و نَتُوبُ إلَيْك

Transliteration:
Allahumma ahdina fiman hadait, wa 'afina fiman 'afait, wa tawallana fiman tawallait, wa barik lana fima a'tait, wa qina wasrif 'anna sharra ma qadait, fainnak taqdi wa la yuqda 'alaik. Innahu la yadhillu ma walait wa la ya'izzu man 'aadait , tabarakta Rabbana wa ta'alait, lakal-hamdu 'ala ma qadait, wa laka shukru 'ala ma a'tait, mas-taghfiruka. Allahumma min jamee'i dhunubi wal khataaya, wa natubu ilaik

This hadith was transmitted by Bukhari #1002


Notes
(Hanafi fiqh)

1. It is recommended (mustahabb) . [As understood from Shurunbulali's Imdad al-Fattah and Ibn Abidin's Radd al-Muhtar]

2. It can be conducted in congregation or alone, but the stronger opinion is that it is limited to the fajr prayer. Some Hanafis allowed it in all loud prayers (Fajr, Maghrib, Isha).

3. In the Hanafi school, one does not raise one's hands. But if one did, it is not sinful.

4. There are various transmitted duas, but one may supplicate (in Arabic) from oneself.
(source: sunnipath.com)