The blast occurred early on Christmas Day, but details only emerged at the weekend.
The device was placed at the front of the Lhasa metropolitan district government offices, in the middle of the city. Windows were shattered up to 100 yards away, and two hotels opposite the blast were damaged. According to the London-based Tibet Information Network (TIN), five people were injured, including two nightwatchmen at the government offices and shop-keepers living nearby.
The size of the explosion, at 1.30am, has made it impossible for the Chinese authorities to ignore or to deny.
A broadcast on the official Tibet Radio station described the blast as "yet another counter-revolutionary bombing staged by the Dalai clique in Lhasa city" and called it "an appalling act of terrorism".
The Tibetan exiled spiritual leader, the Dalai Lama, has always argued against the use of violence in Tibet's struggle against the Chinese, but this is the third bomb to go off in Lhasa this year, and by far the biggest. A government official told Reuters: "It was a huge explosion that could be heard a long way off."
As 1996 draws to a close, Chinese repression and control in Tibet is at its most severe for years, with monks being expelled from monasteries or arrested as part of a political "re- education" campaign. The harshness of the Chinese authorities' approach to Tibet was again illustrated at the weekend when news emerged of an long prison sentence imposed on a 30-year-old exiled Tibetan musicologist, a former Fulbright scholar in the US, who was arrested while making an unauthorised film about folk music and dance in Tibet.
Ngawang Choephel, who left Tibet when he was a child, was arrested in September 1995 about two months after arriving in Tibet. He has been sentenced to 18 years for allegedly spying. China also repeatedly accused "a certain foreign country" - clearly meaning the United States - of funding him and providing equipment in return for information.
This is the longest sentence passed for a political offence other than murder since 1989, when two monks were jailed for 19 years.
An official radio broadcast said that Ngawang Choephel entered Tibet "to carry out his activities under the pretext of collecting information on folk songs and dances in Tibet ... in an attempt to provide the information gathered to the Dalai clique's government-in-exile and to an organisation of a certain foreign country".
It said that he had confessed to the crimes, but gave no details. In contrast, Westerners who travelled with the musicologist in Tibet said he was genuinely involved in filming dance and music, and anxious to avoid anything political, said TIN.
The length of the sentence may be meant as a warning to other Tibetan exiles who visit Tibet.
If a Tibetan exile enters Tibet under Chinese immigration procedures he does so as a Chinese citizen and thus loses any protection from his country of residence.
Ngawang Choephel had Indian travel documents but does not have a foreign passport.
In Washington, the State Department spokesman, John Dinger, said the US was "quite concerned" about the sentence. Ngawang Choephel studied ethnomusicology at Middlebury College, Vermont, during the period 1992- 93.