Dissident republican paramilitaries left a bomb in Newry that was bigger than the device used in the Omagh massacre, the Police Service of Northern Ireland has confirmed.

The device left on Thursday near Newry Canal in south Armagh was a 600lb bomb – 200lb bigger than the air-fuel explosive device that devastated Omagh, causing the biggest single atrocity of the Troubles with the deaths of 29 men, women and children. The Newry bomb was meant to kill members of a passing police patrol, the PSNI also confirmed.

Like the Omagh bomb, the massive device is believed to have been put together by former Provisional IRA "engineers" from south Armagh who subsequently broke from the organisation to form the Real IRA. The aborted attack in Newry took place just hours before dissident republicans mistakenly left a bomb underneath a civilian's car in a loyalist area of Belfast. Security sources said the republican group Oglaigh na hEireann placed the bomb underneath the car because it had once belonged to a retired policeman. However, sources said it had changed hands and was being moved in the Greater Shankill area.

Army bomb disposal officers defused the device and up to 70 homes had to be evacuated. Searches in the nearby republican Ardoyne area recovered guns and ammunition that the PSNI is linking to dissident republicans.

Army bomb disposal officers made the device left close to Newry Canal safe. It had been inside a van.

PSNI chief superintendent Alasdair Robinson rejected criticism that motorists had been able to drive past the bomb and said police had closed a main cross-border road in a very short time. Local Ulster Unionist Assemblyman Danny Kennedy said: "The bomb had the potential to cause lethal damage. A 600lb device at the roadside waiting for a police patrol, it is just unthinkable."

Earlier SDLP Northern Ireland Assembly member Newry and Mourne, Dominic Bradley, said a member of the public had reported the discovery of a suspicious vehicle to police. It had been abandoned with its engine running, he said.

Dissident republican paramilitaries have been blamed for a number of bomb attacks in the city in recent years. Earlier this month, a bomb was found near the Cloghogue roundabout in Newry, just off the main Belfast to Dublin dual carriageway. Police said the device contained a significant amount of explosives and had the potential to kill but was also made safe by army bomb experts.