Police found a 600lb roadside bomb near Northern Ireland's border with the Republic following a tip off, it was disclosed today.
Detectives also seized a car after this week's discovery at Forkhill, Co Armagh.
The PSNI has said the device was designed to kill officers patrolling the area.
Detective Inspector Mark Irvine added it was thanks to the local community that the explosive had been found in time.
"There were two calls that alerted police to this bomb. One of them came from a member of the local community," he said.
"It was that call that helped us pinpoint exactly where the device was, so it could be dealt with by bomb disposal experts."
Army bomb disposal experts spent seven days defusing it. It was packed into a chemical drum.
Mr Irvine added: "The bomb was planted very close to private homes, and there is no doubt that had it gone off, someone could have been killed."
Police want to speak to anyone who uses the Carrive Road in Forkhill or anyone in that area within the last fortnight.
As part of the investigation they seized a white Vauxhall Astra car. It was seen in the Forkhill area on August 31.
Army Sgt Major Colin Grant, who was awarded the Queen's Gallantry medal for saving lives in Afghanistan, helped work on the Forkhill bomb.
The explosion happened in the Drumleck Drive area of Shantallow at around 1.30am.
Several people were forced to leave their homes after the device in Kylemore Park was discovered at around 7.30am.
Separately, a man was shot in the legs and hand today in a paramilitary-style attack.
It was the latest in a series of such attacks in Londonderry, believed to have been carried out by dissident republicans trying to gain control over nationalist areas.
The victim was hit a number of times in both legs and the left hand and is in a stable condition in hospital after treatment.
Police said a number of men forced their way into a house in the Ballymagroarty area of Derry shortly after 1.30am and shot the man.
Detectives appealed for anyone with information to contact them.
It was the latest in a growing number of paramilitary-style attacks in Derry and nationalist areas of other towns for which dissident republicans are believed to have been responsible in recent weeks.
Sinn Fein Assembly member Raymond McCartney condemned the attacks.
"This family is a part of our community and I would call on the community to show solidarity with them at this time," he said.
"While most people are working to build a peaceful and democratic future, it would seem that a minuscule and unrepresentative group think that by carrying out cowardly actions based on spurious excuses, they will frustrate continued progress.
"They will not succeed and should stop their activity before it leads to the killing of more innocent people."
The Real IRA claimed responsibility for all the attacks.
Nationalist SDLP leader and MP Mark Durkan said: "These are cowardly and sinister attempts not only to unnerve a young officer and his family but to intimidate the entire community.
"These actions have to be condemned and stand in stark contrast to the noble service of the young PSNI (Police Service of Northern Ireland) officers and recruits who have chosen to serve the public.
"Those responsible must realise that they will not succeed. The policing service which we now have has been mandated by the Irish people, north and south, in the Good Friday Agreement.
"Those who serve in its ranks are carrying out a patriotic duty which has the endorsement of the overwhelming number of citizens in Derry and the country."
He said the community and the country will remain resolute despite increased disruption and threats from dissident elements over recent weeks.
"Their efforts will not undo the progress that has been made," he added.