Police tipped off by a street vendor found and defused the bomb inside a sport utility vehicle in the business, shopping and entertainment area of Midtown Manhattan on Saturday evening.
The United States views a car bomb that failed to go off in New York's Times Square as a potential terrorist attack, Homeland Security secretary Janet Napolitano said on Sunday.
Police tipped off by a street vendor found and defused the bomb inside a sport utility vehicle in the business, shopping and entertainment area of Midtown Manhattan when it was packed with tourists and theatre-goers on a warm Saturday evening.
"We're taking this very seriously," Napolitano told CNN's "State of the Union" program. "We're treating it as if it could be a potential terrorist attack."
Police said no motive or suspect had been identified. Napolitano and other officials have not specified whether the suspects are Americans or foreigners.
Authorities said the failed bomb -- made of propane, gasoline and fireworks -- could have killed many people.
"This wasn't make believe. This wasn't a false alarm. This was the real deal -- to hurt people," said Fire Commissioner Sal Cassano, adding the force of the bomb could have taken down the front of a building if it had gone off.
New York has been on high alert for an attack since the Sept. 11 attacks in 2001 in which hijacked airliners toppled the World Trade Centre's twin towers, killing thousands of people.
New York Mayor Michael Bloomberg told an early morning news conference: "We have no idea who did this or why."
Times Square was evacuated but most of it was reopened to vehicles and pedestrians shortly after 5 am (0900 GMT) on Sunday.
"Luckily, no one is hurt and now the full attention of city, state and federal law enforcement will be turned to bringing the guilty party to justice in this act of terrorism," New York governor David Paterson said in a statement.
Paterson's statement did not specify whether he suspected foreign or domestic militants in the failed bombing.
Bloomberg said a T-shirt vendor noticed "an unoccupied suspicious vehicle" and alerted a police officer on horseback, who saw the dark-green Nissan Pathfinder had smoke coming from vents near the back seat and smelled of gun powder.
The vehicle was put on the back of a flat-bed truck, covered with a tarpaulin and removed from Times Square by authorities at about 6 am (1000 GMT).
The bomb was discovered around 6:30 pm (2230 GMT) in the vehicle parked on 45th Street and Broadway with its engine running and hazard lights flashing, officials said. It had Connecticut license plates that did not match the vehicle.
The bomb squad removed and dismantled three propane tanks, consumer grade fireworks, two filled five-gallon (19-litre) gasoline containers, two clocks, batteries in each of the clocks, electrical wire and other components.
A locked metal box resembling a gun locker was also removed and taken to a safe location to be detonated.
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