A 22-year-old man is being questioned by police after a bomb and a command wire were allegedly found in a holdall when police stopped a man at the junction of Shaw's Road and Glen Road in the west of the city.
The incident sparked an overnight security alert, forcing at least 12 families from their homes, and comes just two weeks after dissident republicans launched a mortar bomb at a PSNI Land Rover on the Falls Road.
Yesterday morning police were in nearby Lenadoon Avenue as a search took place at a block of flats believed to be linked with the investigation. A number of cars were also searched.
It comes just two weeks after a mortar bomb was fired at the PSNI vehicle.
Dissident republicans claimed that attack. It is understood the device found on Thursday consisted of a mortar bomb and command wire. The PSNI has not commented on whether new Semtex – which dissidents recently claimed to have acquired – was used.
Residents told the Belfast Telegraph of their anger at the disruption, as some sheltered at the Glen Community centre.
An 86-year-old resident of Shaws Road said police came to her door at 1am on Friday warning her about the bomb.
"I didn't want to leave so I just moved to the back of the house," she said. "They came back at 7am to say that everything was OK. I wasn't too worried, if it happens, it happens."
Paul Kelly (63) said those responsible for the bomb "need to wise up". "I've lived here since 1968 and I've been through this before," he said.
West Belfast Sinn Fein MP Paul Maskey told those behind the bomb that they needed to listen to the community and "go away".
"West Belfast suffered enough during the conflict without having unrepresentative groups holding the future of this community to ransom with random acts of violence," he said.
Mr Maskey said those behind the dissident campaign were "sticking two fingers up" to the community.
DUP Policing Board member Jonathan Craig welcomed the police operation.
"These groups have a clear intent to drag Northern Ireland back and clearly remain very dangerous," he said. "I would hope that this news helps to further strangle their ability to terrorise our community."
UUP Policing Board member Ross Hussey praised the actions of police in foiling an attack.
"The PSNI is doing an extremely difficult job in trying to protect the entire community and at great risk to themselves," he said.
Belfast SDLP councillor Tim Attwood described the bomb as "hugely worrying".
"My husband and I were put out by the police at 12am, and we were able to come back into the house at 7am. I left to go to a funeral at 9.30am, and now the street is blocked again. I'm 67 and my husband is 70 and we have been out all night. I've lived here for 35 years. All we want is peace and quiet now."
Elizabeth McKee (67), resident of Dungloe Crescent