"They put a log on the line, about six or seven feet long," McHardy, now 81, told Australian commercial radio on Wednesday.
"The royal train hit it and dragged it about 150 yards (metres) up towards the Bowenfels railway station... but fortunately it didn't derail," he said.
Railway specialists told police at the time that the queen was only saved from catastrophe because her train was not travelling at full speed.
"According to the experts, if he (the driver) had been doing maximum speed he would have derailed," McHardy said.
The train continued on under brakes, with the log still wedged under the front wheels, before finally coming to a halt at the level crossing near the station.
The locomotive remained on the tracks and escaped serious damage, while the log did not splinter upon impact, but just suffered deep indentations from the train's wheels, the retired policeman said.
McHardy, who was a detective sergeant at the time, said he was breaking his silence on the alleged plot, which he said has been kept under wraps for nearly four decades, in a bid to flush out information on the culprits, who were never arrested.
"It was one of the big regrets of my police service," McHardy told his local paper, the Lithgow Mercury.
"We never came up with any decent suspects because if we interviewed people we seemed to be talking in riddles. We couldn't disclose what our inquiries were about" because of the secrecy, he said.
Among those targeted in the investigation were suspected sympathisers of the Irish Republican Army, which was waging a violent struggle against British rule in Northern Ireland at the time, McHardy told the Mercury.
McHardy, who later went on to head the police force in the town of Lithgow, could not immediately be reached for comment by AFP.
The queen, who had just turned 44, and her party continued on their journey from Sydney to the New South Wales town of Orange after the incident.
McHardy insists the incident could not have been an accident or simple vandalism as the log was rolled down an embankment and placed on the tracks after a special locomotive had swept the tracks for security, but before the royal train passed.
"It had to be (deliberate) because it was pitch dark and the pilot train went through only an hour before" and there was nothing on the tracks, he told Macquarie radio.
The heavy veil of secrecy that was drawn across the incident to protect the Australian government from embarrassment hindered the investigation, he said. "Perhaps now that the story has gone public someone might come forward," McHardy said.
Reports in Britain said the queen and her husband had remained unaware of the dramatic incident for the past 39 years.
A spokesman for the Australian Federal Police said the agency was checking its archives for details of the alleged plot.
The New South Wales police declined to confirm the incident had occurred as officers were still checking decades-old records.
"What I can say is that the alleged matter is no longer being actively investigated. However, if new information does come forward we will follow it up," a police spokeswoman said.
Image of Britain's Queen Elizabeth II en route to London's Houses of Parliament, by Adrian Dennis.