The device, which police described as "crude but effective", was found inside a refuse bin in a car park at the Tesco supermarket in on Monday.

It was made up with flammable liquid and a domestic gas cylinder.

The Continuity IRA, which is opposed to the peace process and the Good Friday Agreement, said it had left the device.

There are still a very small number of people with little regard for the lives of others Tommy Gallagher SDLP MLA

Police Chief Superintendent Eddie Graham said it had posed a serious danger, not only to the security forces, but also to the public.

"There was a similar device recovered a number of days ago at Keady," he said.

"They want to see the colour of blood. If it's a security force member that's wonderful, if it was a bystander that would just be too bad.

"Quite clearly it could have been a bystander.

"These people are clearly trying to threaten community safety and it does pose a real threat."

Tommy Gallagher, an SDLP assembly member for the area, described the attack as an act of madness.

"It's quite clear that there are still a very small number of people with little regard for the lives of others or for the wishes of the great majority of the people of Dungannon," he said.

Waterworks device

A similar device was found at a waterworks near Keady in County Armagh last week.

The alarm had been raised following a number of calls - reported to be from the Continuity IRA - claiming they had left a bomb in the area.

It was made safe by Army bomb disposal experts.