A huge bomb planted close to the border was intended to murder police officers, a security chief said tonight.
The device, containing 600lb of fertiliser based home-made explosives, bigger than the bomb that devastated Omagh, was defused by army bomb disposal experts outside Forkhill in south Armagh.
Dissident republicans were being blamed for setting the bomb - with a command wire which led across the border to a firing point.
Newry and Mourne police commander Chief Inspector Sam Cordner said the bomb was targeted against PSNI officers, but said had it been detonated it would have demolished nearby houses, killing the occupants.
As detectives launched a major investigation and forensic experts studied the device he accused those who planted it of being reckless and not caring who they killed.
He said: "There could have been a devastating outcome to this incident. The actions of terrorist criminals in planting this device in the Forkhill area put local people and police officers at significant risk.
"Their actions were reckless and dangerous in the extreme. Their target may have been the police, but they did not care who they killed or injured."
The alarm was first raised last Tuesday with a phone call to a local newspaper. Inspector Cordner said the location was "very, very vague", covered a wide geographic area and it was much later when the device was found at the side of the Carrie Road with a command wire leading across a field to a firing point in the Irish Republic.
"Police officers were immediately put on the ground, cordoned off the area and moved people from the danger area.
"Twenty people were evacuated from six homes on Saturday afternoon, some of them were elderly, others families with numerous young children," he said.
"The bombers were reckless, had the device exploded the houses would have been demolished and those inside killed."
Thanking the families for their patience and forbearance, Inspector Cordner the bomb plot would not deter his officers from providing a service to the people of South Armagh.
"Part of that service will be an investigation into the planting of this device. Anyone who can bring these criminals to justice should contact us."
It was the largest bomb in Northern Ireland in a long time. In January a 300lb device was defused in Castlewellan, Co Down - thought to be on route to the Ballykinlar army base outside Newcastle - and in May the components for another bomb containing around 100lb of home-made explosives were found near Rosslea, Co Fermanagh.
Politicians on all sides condemned the terrorists responsible for planting the bomb in a bid to drag the North back to its bloody past.
Security Minister Paul Goggins MP has condemned those who left the device as criminals and praised the professionalism of the security response.
Mr Goggins said: "It is clear that those who left this bomb - which could have inflicted death and serious injury - have no regard for the people living in the area."
Sinn Féin MP for Newry and Armagh Conor Murphy said he was extremely concerned.
He said: "I would question the motives of those who are putting the local community in such danger.
"I challenge those who planted this bomb in the community to come forward and explain why they have done so. How is this furthering the struggle for Irish freedom?"
Ulster Unionist deputy leader and MLA for the area, Danny Kennedy said the bomb was "a most worrying find and one that I am deeply alarmed and anxious about".
Mr Kennedy added: "Let us be realistic - this is very real - the threat posed by dissident republicans is very real. It is one that is constant, we need only reflect on the murders of Constable Carroll and Sappers Mark Quinsey, and Patrick Azimkar earlier this year or the incidents in Rosslea or Castlewellan.
"This was a viable device. If this had detonated we would have been looking at a serious loss life."
Such incidents were causing alarm throughout the whole community, with unionists feeling particularly vulnerable, he said.
Rather than proposing the closure of police stations across the province and the winding down of security, surveillance and intelligence gathering, it should be stepped up, he added.
SDLP Newry and Armagh MLA Dominic Bradley said: "This is the most serious threat yet from dissident republicans to the people of South Armagh. Without doubt, there could have been civilian casualties and deaths caused by a bomb of this size.
"I condemn the actions of these people without question, as the SDLP has in the past always denounced violence or the threat of it. The people who planted this device are not acting for the people of South Armagh, in fact, they are putting the people of South Armagh at huge risk of death. The local people don't want this nor do they want people carrying this out in their area."
Alliance Party leader David Ford, MLA, condemned those behind the bomb which he described as "a deeply sinister development".
He added: "A device of this magnitude could have caused untold carnage.
"Those who seek to destroy progress in Northern Ireland must never prevail. Finds like this underline the need for politicians to work together and show that peace and devolution is the only way forward."