Cascaded difference frequency generation has been observed in intracavity optical parametric oscillators based on bulk lithium niobate and producing nanosecond pulses of terahertz radiation. Two idler waves are generated, namely: the primary idler wave associated with the parametric down conversion process itself; and a secondary idler wave, due to difference frequency generation. Experimental investigations of the frequency, temporal evolution, propagation direction, intensity, phase matching and oscillation threshold of the generated down-converted waves are reported. The overall generation efficiency for the terahertz radiation is enhanced, thereby overcoming the Manley-Rowe limit. Advantages of the present approach over schemes based on periodically poled lithium niobate are identified.