Police in Indonesia say they have found explosives in central Java of the type used in an attack in Bali last year.
Two militants were killed in the raid targeting militant head Noordin
The material was uncovered following a tip-off from a man arrested on Saturday during a raid targeting the fugitive militant leader, Noordin Mohammad Top.
Noordin, one of South East Asia's most wanted men who is accused of helping to mastermind a series of bombings, evaded capture but two militants were killed.
Three suicide bombers killed 20 people in an attack in Bali last October.
More than 200 people died in bombings in Bali in 2002.
Also on Monday, an Indonesian court sentenced two men to four and seven years in prison for helping Noordin.
According to officials, the men killed in Saturday's raid in the village of Binangun were senior members of Jemaah Islamiah, an Islamic militant group blamed for the attacks in Bali, elsewhere in Indonesia and further afield.
National police spokesman Anton Bahrul Alam said that important evidence had been uncovered during the raid - two weapons, a laptop, SIM cards for mobile phones and a handwritten document.
Noordin is wanted over a series of attacks in Indonesia
Information gleaned from two men the police arrested led investigators to a storage unit in a town close to the site of the raid.
There police say they found explosives and other equipment, which suggested a bomb-making operation was well under way.
"They found a bomb like those used in the Bali blasts," said Mr Alam.
Indonesian and foreign intelligence agencies have been warning for some time that militants could be planning another attack.
It may be that those plans have now been thwarted, at least for the time being, according to the BBC correspondent in Jakarta, Rachel Harvey.
The Indonesians have been successful in tracking down many of those implicated in some way with the Bali bombers.
On Monday 32-year-old Joni Akmad Fauzani was jailed for four years for harbouring Noordin in early 2005.
Abdullah Sonata, 27, was jailed for seven years for withholding information about terrorists.
But the man the security forces would most like to track down, Noordin himself, continues to evade capture.
He is wanted in connection with a string of attacks across Indonesia, including Bali.
The man thought to be his closest ally, bomb maker Azahari Husin, was killed in November after police tracked him down in east Java.
As long as Noordin remains at large, the threat of further attacks remains, our correspondent says.