Dissident republicans are being blamed for planting a car bomb that exploded close to a bank and hotel on the outskirts of Derry city early this morning.
No one was injured in the blast but dozens of families had to leave their homes and substantial damage was caused to buildings in the area.
The bomb in a Vauxhall Corsa exploded shortly after midnight.
It was left close to a branch of the Ulster Bank, a row of shops, and Da Vinci's Hotel along the Culmore Road on the west bank of the city.
After a warning was given, the PSNI had an hour to evacuate the built-up area.
Two months ago dissidents left a car bomb outside the Strand Road police station, just over 1km away.
Northern Ireland Deputy First Minister Martin McGuinness condemned the attack, saying that those who carried it out had failed miserably.
Speaking on RTÉ's Morning Ireland, he said the reality of these occasional attacks had to be accepted, but that the peace process was too strongly entrenched.
Minister for Foreign Affairs Micheál Martin also condemned last night's events in Derry.
He said: 'Such attacks are utterly wrong and entirely futile. I am relieved that no one was injured in last night's incident but I appreciate that it caused fear and disruption to local residents.
'It is also an attack on the economic infrastructure in Derry at a time when everyone is trying to attract jobs, tourism and investment.'
Mayor Colm Eastwood said he was disgusted by latest the attack in the city.
He said: 'I do not know what these people are hoping to achieve. They say they love their country but they spend their time trying to destroy it.
'The people of this city will be very angry. It is just shocking that someone would put a bomb anywhere, but especially at a commercial centre.'
Yesterday, police chiefs warned of a increasing number of bomb-making techniques employed by dissident republicans, saying the development was of great concern.
There was also increasing co-operation among groups opposed to the Northern Ireland peace process.
PSNI Assistant Chief Constable Judith Gillespie said they were concerned about a 'growing capability' of dissident groups.
She said: 'We have seen an increase in technical expertise and the successful detonation of improvised explosive devices, the range of techniques they are now using - and that is of great concern.
'And we have also seen groups working more closely together than we have seen in the past and that's also of serious concern.'
Her warning came weeks after the security services raised the threat level of a dissident attack in mainland UK from moderate to substantial.
Source a hAon, Source a dó