Police believe dissident republicans are to blame for the bomb

The device, containing 1200lbs of explosives, was primed and ready for detonation.

It was found in a van seen being driven suspiciously on the Foyle Bridge at about 0615 BST on Sunday.

BBC Ireland correspondent Mark Simpson said it was a bigger bomb than the one used by the Real IRA in the Omagh bombing in August 1998 which killed 29 people.

Police found the red van abandoned a short time later on the nearby Clooney Road.

The explosives, with wires and a timer pack, were found after Army technical officers carried out a controlled explosion on the van.

Police believe dissident republicans are to blame.

The find follows a discovery of 500lbs of explosives in County Monaghan near the Northern Ireland border on Friday.

On Friday, police in the Irish Republic said they had foiled a major operation by dissident republicans following the discovery of 500 lb of explosives in County Monaghan near the Northern Ireland border.

It was clearly designed to cause immense damage George Brien PSNI chief inspector

Chief Inspector George Brien said the bomb in Derry was already primed when officers discovered it.

"It was clearly designed to cause immense damage," he said.

"I have no idea as to the intended target at this stage, but there is no doubt that the target was saved by the prompt alertness of the police officers."

Northern Ireland Secretary Paul Murphy praised the police who had "almost certainly helped to prevent very significant loss of life".

"My praise for the PSNI officers involved is matched only by my contempt for those who planned to cause chaos and misery," he said.

SDLP councillor Gerard Diver said there was shock in Derry that such a device was being transported "to create mayhem and destruction and to take away lives".

Ulster Unionist MP Jeffrey Donaldson said he believed dissident republicans were behind the bomb.

"It demonstrates that whatever the mainstream IRA do, there is still a very potent threat out there from republican terrorists."