The Real IRA has said it carried out last night's car bomb attack close to a bank and hotel on the outskirts of Derry city.
The claim of responsibility was made to the Derry Journal newspaper. A recognised code word was used.
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.
Speaking later during a meeting at the UK Conservative Party conference he described those responsible for last night's explosion as 'conflict junkies who were running against the wishes of the vast majority of people in the North'.
Speaking at the same meeting, Northern Ireland Secretary Owen Paterson said those who carried out last night's bombing would not be allowed to achieve their aim.
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.'
Minister Martin said it was also an attack on the economic infrastructure in Derry.
Mayor Colum Eastwood was near the scene when the bomb exploded.
He said it was an attack on the elderly in the nearby nursing home, the workers and tourists in the hotel and an attack on the people of Derry as a whole.
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,' he added.
Taoiseach Brian Cowen described the bomb as a wanton act of violence that serves no purpose.
In the Dáil, Mr Cowen said it was an appalling incident and thankfully no one was killed.
Fine Gael leader Enda Kenny said the bomb was a serious concern and said the Fine Gael support could be relied on by the Government so that the threat could be dealt with.
Sinn Féin's Caoimhghín Ó Caoláin appealed to those responsible to desist in their actions.
'Growing capability' of dissidents
Speaking on RTÉ’s News At One, Minister for Justice Dermot Ahern said dissidents were showing signs of increased capability but that they did not have significant support.
He said the necessary resources would remain in place to tackle dissident activity despite economic difficulties.
Yesterday, police chiefs warned of an increasing number of bomb-making techniques employed by dissident republicans, saying the development was of great concern.
PSNI Assistant Chief Constable Judith Gillespie said they were concerned about a ‘growing capability’ of dissident groups.
'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,' she said.
‘And we have also seen groups working more closely together than we have seen in the past and that's also of serious concern.’
Assistant Chief Constable Gillespie's warning came weeks after the security services raised the threat level of a dissident attack in mainland UK from moderate to substantial.