Associates of shot mob boss Owen Maguire are believed to have been responsible for a pipe bomb placed in the exhaust of a car belonging to a rival mobster's innocent girlfriend.
Flames were seen coming from the exhaust at 2.40pm yesterday, sparking a major security alert.
The device was viable and had wires protruding from it.
A senior source told the Herald that gardai believed the device was detonated by a criminal using a mobile phone.
"The car was parked in a very busy street in Drogheda," said the source. "The bomb could easily have led to loss of life."
This latest incident, involving the innocent woman, is part of a bitter feud in the Drogheda area and followed six attacks last Thursday and Friday.
These included four petrol bomb attacks and an assault on a teenager.
Following yesterday's pipe bomb incident, a number of homes in the area were evacuated.
Security cordons and traffic diversions were also put in place.
Gardai last night deemed the area safe.
They said the suspect device was recovered and made safe by army bomb disposal officers. Both the car and device were removed for technical and forensic examination.
Gardai had been carrying out stop-and-search armed patrols in recent days in an attempt to curb the rising tensions.
The situation has become so bad that sources are saying more gardai are needed to tackle the feud.
There have been fears in recent weeks that the spate of incidents will eventually lead to a death.
The feud kicked off on July 5, when Maguire was shot in an attempt on his life.
He is still undergoing treatment at the National Rehabilitation Hospital in Dun Laoghaire.
The attempted murder is believed to have been carried out by a feared Coolock gangster who is linked to 10 other shootings.
The first of last week's six incidents took place shortly after 11pm on Thursday in the Termon Abbey area.
A petrol bomb was thrown at the home of an innocent relative of a man involved in the feud.
It is understood no one was hurt, but the property was badly damaged.
Less than 15 minutes later, there were reports of a man with a gun entering a halting site in the Cement Road area of Drogheda.
Gardai attended but found no firearm. No one was injured.
At 2am on Friday, part of Cement Road was damaged in a second petrol bomb incident.
Minutes later, a car was set alight in the St Laurence's Park area of Drogheda. The car is currently being examined by gardai.
A second car was set alight at 5.20am in St Laurence's Drive, Drogheda.
An 18-year-old man needed stitches when he was attacked with a hatchet in the Cement Road area at 5pm on Friday.
Only late last month, two fire crews and gardai attended the scene of an arson attack at a property in the Moneymore estate in Drogheda.
A week before, five shots were fired at the property .
A shed was destroyed in the huge blaze which also led to the oil tank at an adjoining property catching fire.
The incident was the second attack in four nights on the property.
It is the home of an innocent woman who has no involvement in the gang dispute.