Updated at 7am on Friday
Army explosives experts were deployed to Fgura on Thursday after what is believed to be a car bomb was discovered in St Anthony Street.
The discovery was made at around 6.30pm.
Sources said a bomb had been planted under a Mitsubishi Shogun owned by a person 'well known to the police'.
The alert was raised when somebody noticed a spark and heard a strange noise, but the bomb, although activated, failed to go off.
The car was parked in a residential area so the road was closed and the Armed Forces' Bomb Disposal Unit was called.
The sources said the bomb appeared to a home-made device.
An inquiry is being held.
The government in a statement expressed its support to the forces of law and order, saying initial indications were that this was an unexploded bomb.
It said it was committed to tracking down whoever was responsible for this infamous and cowardly act' which could have had serious consequences to innocent people, apart from the intended target.