The bomb was found in an abandoned van in Newry, near the border with the Republic of Ireland. It is one of the largest ever found.
Chief Superintendent Alasdair Robinson stated that it could have caused "death and massive destruction" and that it had been "fully primed and ready for use".
This is the third attempted attack in the Newry area over the last few weeks, and police are believed to be the intended targets. Dissident Irish Republican Army groups are believed to be the plotters.
Early Saturday, a small bomb was found and disarmed by police, in Belfast. This one had been placed under a parked vehicle.
Saturday afternoon saw a rally, staged by mainstream Republicans, to protest violence.
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