The discovery comes just two days after Australian authorities had warned about possible attacks against US interests in this Southeast Asian nation.
Nine home-made bombs wired with detonators and timers were recovered from a bus in West Java province on Friday morning, National Police Chief Dai Baktiar said shortly after briefing president Susilo Bambang Yudhoyono.
Police boarded the bus, part of a convoy of vehicles travelling from the town of Garut, on the outskirts of the provincial capitol Bandung, a popular weekend getaway for Jakarta residents.
A US and Australian-trained local police anti-terrorism unit was credited with detecting the explosives.
Fourteen people aboard the bus are now in custody.
On Wednesday, the Australian foreign ministry set off a political ruckus with its neighbour, upgrading its Indonesia travel advisory to reflect what it called "credible" new intelligence that a "terrorist strike was imminent against Western targets".
The advisory, which was quickly matched by the governments of New Zealand and Britain, urged the suspension of all non-essential travel to Indonesia through the holiday period.
Police anti-terrorism units are a
part of a security policy revamp
It described the threat as "extreme", indicating a strike is likely to occur within the next two weeks, and suggested the American-owned Hilton Hotel chain is a possible target.
Hilton hotels are found in Jakarta, Surabaya and on the resort island of Bali, a favoured tourist destination for Australians over the Christmas holidays.
Incidentally, on Thursday police in Riau province, acting on a tip, had recovered four home-made explosive devices from an unoccupied house in the town of Pekanbaru. Police believe they were to be used against neighbouring churches. Roughly 8% of Indonesia's 230 million population is Christian.
In addition to the explosives, investigators recovered military-style clothing, binoculars and pro-jihad documents including one titled Jemaah Islamiyah (JI) Jihad Agreement.
Similar tracts, which spell out the obligations of the would-be attackers, were recovered earlier this year along with a vast cache of weapons, explosives and forged travel documents at what police believe was a Jemaah Islamiyah safehouse in Semarang, Central Java.
The shadowy, al Qaida-affiliated group is blamed for several high-profile attacks in Indonesia in recent years, including the 2002 Bali bombings that killed more than 200 people, and the bombing of the Australian embassy in September that claimed 10 lives.
Indonesian security agencies are
conducting a major operation
JI operatives are also believed responsible for the truck bombing of the Marriott Hotel in Jakarta in 2003.
"From the information collected from four people involved in the Australian embassy bombing, we believe that the terror network will still attack," Bachtiar said.
"There are occasions that may be used for terror actions, such as certain religious holy days or New Year's Eve."
Earlier in the week Indonesian security forces began their largest domestic operation since 2000, ordering 80% of the country's police officers to be prepared to work through the holiday season, protecting churches, hotels, entertainment centres and other public spaces likely to draw holiday crowds.
"From the information collected from four people involved in the Australian embassy bombing, we believe that the terror network
will still attack"
National Police Chief
"We have launched a special operation called Candle 2004 for all areas of Indonesia," Bachtiar said on Friday. "Our aim is to secure people and the places of worship, and recreational places and shopping centres."
The government has mobilised nationally against religious attacks with increasingly vigour over the past four years since a bloody Christmas Eve bombing campaign four years ago.
In what is seen as the first shot in an ongoing assault against the country's scattered Christian communities, bombs rocked churches the length of the sprawling archipelago, killing 19 worshippers and injuring almost 200 others.
In a separate development, Indonesia has expressed concerns about Australia's plans to extend its maritime zone to include Indonesian territorial waters. Foreign Minister Juwono Sudarsono has described the move as a breach of Jakarta's maritime jurisdiction.
"The Australian measure would cover almost two-thirds of Indonesia's territorial waters," he said, adding that he had requested an explanation from Canberra on the matter.
For his part, Australia's Defence Minister Robert Hill defended Canberra's proposal for a new maritime zone, saying it was not an extension of jurisdiction but would provide better protection to offshore oil rigs.
Australia's Defence Minister Hill
has defended Canberra's stand
"It is an extension of geography within which we would like to know the nature of ships that intend to either transit at Australian waters or intend to land in Australian ports," Hill said in Jakarta.
"My understanding is that this is not in breach of any international law and Australia obviously is committed and intends to comply with all international law obligations."
Hill was speaking after a meeting with his Indonesian counterpart.
Under the plan announced by Prime Minister John Howard on Wednesday, all ships travelling to Australia will be required to provide details of their journey and cargo if they enter the 1000 nautical mile zone.
Vessels coming within a 200 nautical mile limit of the Australian coast will also be required to furnish extra details on cargo, ports visited, location, course, speed and intended port of arrival.