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Police say the US-bound package discovered on a plane in Dubai contained explosives and an electrical circuit linked to a mobile phone SIM card.
The device was also said to have been prepared in a "professional manner" and bore the hallmarks of terror groups such as al Qaida.
The explosive material PETN, or pentaerythritol trinitrate, was used. This is the same chemical found after the failed attempt to blow up a plane over Detroit last Christmas.
A major international terror alert was launched after security staff found printer cartridges with wires attached at cargo hubs at East Midlands Airport in the UK and Dubai on Friday.
The packages were addressed to synagogues in Chicago, and were on Chicago-bound cargo planes that had set off from Yemen in the Middle East.
The bomb also contained lead azide, an explosive compound which can be used in detonators.
Police say they were tipped off by a call from abroad. The phone call warned of the possibility of an explosive device hidden in postal packages onboard the FedEx flight from Yemen.
US President Barack Obama said on Friday night he was dealing with a "credible terrorist threat".
Home Secretary Theresa May confirmed the package at East Midlands did contain explosive material, but said it was not yet clear whether it was a "viable explosive device".
Forensic experts were examining the finds, which have been linked to al Qaida in the Arabian Peninsula, based in Yemen.
Cobra, the UK Government's emergency planning committee, was meeting to discuss the situation but David Cameron, who is at his Chequers country residence, was not due to attend or take part.
Downing Street said the Prime Minister had spoken to the Home Secretary last night, and was being kept up to date with the situation.