Police said they arrested two Palestinians believed to be on their way to carry out a major attack Wednesday in central Israel (search). A bag containing a large amount of explosives was also found, they said.
The bag was blown up in a controlled explosion that shattered nearby windows and was heard for miles.
Police Commander Yehuda Bachar said: "A large attack which would of had a lot of victims" was averted.
Military and police were placed on high alert early in the morning after receiving intelligence warnings that a potential suicide bomber and an accomplice had crossed into Israel to carry out an attack.
Hours later, a police anti-terrorism unit captured two suspects in Kfar Kassem, an Israeli-Arab village 12 miles northeast of Tel Aviv, Bachar said. It was not immediately known to what group they belonged.
Two bags, one containing explosives, were found in the same area, Bachar said. The size of the explosion led police to believe the device contained dozens of pounds of explosives.
"It was a huge explosion that damaged the windows in nearby homes," Bachar said.
The reported attempt came as Palestinian officials awaited a response from militant groups about a proposal to suspend attacks against Israelis.
Escalating violence has bedeviled implementation of a U.S.-backed peace plan launched at a summit in Jordan on June 4.