Peter Mandelson: Matter will be investigated by police

"All I know is that I feel very safe and very secure.

"Whatever needs to be investigated will be investigated by the police who, as ever, will do a very good job."

Security sources have said the device was in a holdall bag and was discovered at least 800 yards from the castle building. It contained a detonator and a quantity of home-made explosives.

A Downing Street spokesman played down the significance of the device which he said was "small" and was found well away from the main castle building.

The spokesman said it was a "comparatively minor incident", but was being investigated by the RUC.

Officials have said security was important, and any lessons that needed to be learned from the incident would be taken on board.

A Northern Ireland Office spokesman said Mr Mandelson was not in the building at the time of the discovery of the device by a farmer cutting hay.

However, if the device had lain undiscovered for some time it could have been in the grounds when the Prince of Wales was meeting victims of the Troubles at a garden party last week.

The castle has been the focus of a security operation since the device was found shortly after 2100 BST on Monday, just inside the boundary wall of a field on the Moira Road.

A follow-up search of the area around the site is being carried out.

Jeffrey Donaldson: Ongoing terrorist threat

Local Ulster Unionist MP Jeffrey Donaldson said the incident illustrated the ongoing level of terrorist activity in Northern Ireland.

"Clearly this indicates there is ongoing terrorist activity in Northern Ireland.

"I think it's wrong the security should be stepped down until that level of terrorist threat is dealt with," said the Lagan Valley MP."

The house and grounds of Hillsborough Castle play host to many of Northern Ireland's official occasions.

Prince Charles' visit followed a ceremony earlier this year when the Queen presented the Royal Ulster Constabulary with the George Cross at a special event in the castle grounds.

Republican dissident groups opposed to the peace process, which include the Real IRA and Continuity IRA have carried out a number of recent attacks on army installations throughout Northern Ireland.

No-one has been injured in the attacks.

The Continuity IRA said it carried out an attack on a hotel in Irvinetown, County Fermanagh in February. No-one was hurt after the hotel was evacuated following a telephone warning before the device exploded in the carpark.