The bomb was discovered after up to 80 PSNI personnel scoured an area in the Creggan Heights, a housing estate situated on a hill on the outskirts of Derry, Presstv Reported.
As the PSNI searched for the bomb they were attacked by local people throwing petrol bombs.
According to multiple media reports, more than 100 local youths threw more than 40 petrol bombs and other missiles at the PSNI during the security operation, setting several police vans on fire.
The confrontation between the police and local residents underscores the depth of support for militant Republican organisations, which are intent on attacking the PSNI, prison officers and British army personnel.
The PSNI has blamed the latest bombing attack on the militant Republican organization, the New IRA.
The PSNI and the British media refer to militant factions as “dissident” Republicans in an attempt to create divisions in the nationalist community.
The disturbances in Derry come on the heels of the discovery of a mortar bomb in Strabane, County Tyrone.
The device was found on a wall near houses in the Church View area of Strabane on September 7.
The PSNI described the mortar bomb as a “deadly device” and attributed the attempted bombing to the New IRA.
The PSNI claims that the New IRA intended to launch the mortar bomb into Strabane police station from Church View, which overlooks it.
The stepped up activity by militant Republican factions comes against the backdrop of an intensifying political crisis in Northern Ireland.
Deep anxiety over Brexit, coupled with fears over the return of a hard border between the Republic of Ireland and the six counties of the north, have galvanized Republicans of all stripes into action.
In late July, Mary Lou McDonald, the leader of the mainstream Republican group, Sinn Fein, called for a border poll (or an Irish Unity referendum) in the event of a no-deal Brexit.