"The plot was derailed in early 2002 when a south-east Asian nation arrested a key al-Qaeda operative," he said in a speech at the National Guard Memorial Building in Washington.
Last year, the Bush administration disclosed a plot to attack targets on the west coast of the US using hijacked planes, saying this was among ten disrupted al-Qaeda plots, but the president gave more details yesterday.
Mr Bush said that in October 2001, Khalid Sheikh Mohammed, the mastermind of the 9/11 attacks that year, had set in motion a plot for another attack inside the US, using shoe bombs to hijack an aircraft and fly it into the tallest building on the west coast.
Rather than use Arab hijackers as in the 9/11 attack, Mohammed "sought out young men from south-east Asia whom he believed would not arouse as much suspicion," Mr Bush said. One of Mohammed's key planners was Hambali, the alleged operations chief of the al-Qaeda- related terrorist group Jemaah Islamiyah.
Under the plot, the hijackers were to use shoe bombs to blow open the cockpit door of a commercial jet, take control of the plane and crash it into the Library Tower in Los Angeles, since renamed the US Bank Tower, the president said.
The plot was derailed when a south-east Asian nation arrested a key al-Qaeda operative. Mr Bush did not name the country or the man arrested.
The president has been on a campaign to defend his controversial domestic monitoring programme. But the White House would not say whether the 2002 plot was stopped as a result of the National Security Agency programme to eavesdrop on the international e-mails and phone calls of people inside the US with suspected ties to terrorists.
Mr Bush only said "subsequent debriefings and other intelligence operations" after the arrest of the operative led to information about the plot, and to the capture of others involved in it. Hambali, for instance, was captured in Thailand in 2003 and handed over to the US.
"It took the combined efforts of several countries to break up this plot," the president said. "By working together, we took dangerous terrorists off the streets. By working together, we stopped a catastrophic attack on our homeland."
Meanwhile, an audacious al-Qaeda jail-break in Yemen last week bore the hallmarks of an "inside job" and raised questions about the effectiveness of a key Arab partner in the war on terrorism, US and European security officials said yesterday.
The 23 inmates who escaped through a 150yd tunnel hollowed under their prison to a nearby mosque included leaders of deadly attacks on a US warship and a French oil tanker.
Western annoyance at the security breach has been compounded by a perception that Yemen was slow to respond and was not fully co-operating with the world police organisation Interpol. A week after the escape, none of the men has been caught.
A European counter-terrorism official said the "limited" Yemeni response reinforced the impression that the escapees had help from the authorities.