Sky sources say at least three mortars have been found in the back of a van on the outskirts of Londonderry.
Sky's Ireland correspondent David Blevins said: "It would appear that police have managed to thwart yet another attempted attack by dissident Republicans.
"A huge security operation has been under way for several hours now but in the last few minutes Sky sources have confirmed to us that police intercepted at least three mortars last night."
One hundred families have been evacuated from their homes and three people have been detained, including two men aged 35 and 37.
Blevins added: "We are being told by local people in the Letterkenny Road area that police stopped the van and there is some suggestion they stopped a motorbike at the same time" before they made the arrests.
"The police realised very quickly that they had intercepted the mortars primed for an attack in the vehicle with a Southern Irish registration number plate."
The Army bomb squad was called in to defuse the devices.
"The timing of any attack would be significant given that we are just four days away from a Westminster by-election in Northern Ireland in the mid-Ulster constituency - the seat which was formerly held by Sinn Fein's Martin McGuinness," Blevins said.
"That indeed may have been why a possible attack was being planned by those opposed to the peace settlement."
The four contenders for Thursday's by-election are Sinn Fein Assembly Member Francie Molloy, independent Nigel Lutton, the Social Democratic and Labour Party's Patsy McGlone and Eric Bullick of the cross-community Alliance Party.
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