Indonesian anti-terrorism police have shot and killed three suspects after a gun battle at a house near the capital Jakarta, police said.
The residential neighborhood of South Tangerang was evacuated after the suspects allegedly threw explosives at police and other, larger devices were found at the house, police said.
Jakarta police chief Mochamad Iriawan said explosive experts had defused two bombs and were still in the house.
The men planned to stage their attack on Christmas Day or New Year's Eve, Iriawan said in a televised interview from the neighborhood south of the city. They were to stab police officers in order to attract a crowd and then detonate bombs, he said.
The three men were killed in a shoot-out with the police's anti-terror squad after refusing an appeal from authorities to surrender and come out of the house in a leafy residential compound in Tangerang, a Jakarta satellite city.
National Police spokesman Rikwanto said the men threw explosives and fired guns at police. A fourth man, who was arrested in the neighborhood, had led police to the house used by the militants.
"During the raid, we tried to be careful but they threw something from inside the house and it was a bomb but it did not explode. Then they fired from inside," said Rikwanto, who like many Indonesians uses only one name.
Indonesian television footage showed a bomb squad officer wearing a blast-resistant suit entering the house as locals watched from behind a police tape.
The authorities believe the suspects were linked to several militants arrested on 10 December in another neighborhood on the outskirts of Jakarta who were allegedly planning a suicide bomb attack on a guard-changing ceremony at the presidential palace the next day.
Police have attributed that foiled plot, in which a woman was to be the suicide bomber, to Bahrun Naim, an Indonesian with the Islamic State group in Syria.
They also say Naim was behind a bomb lab that was raided last month in West Java and contained enough explosive materials to make bombs three times more powerful than those used in the 2002 Bali bombings.
Islamic State claimed responsibility for an attack which killed eight people in Jakarta in January.
Indonesia has carried out a sustained crackdown on Islamic militants since the Bali bombings. But a new threat has emerged in the past several years from militants who have switched allegiance to the Islamic State group and from new recruits.
The Australian government's advice to travellers was updated on Wednesday and said the terrorist threat level in Indonesia remains high.