We consider the microstructure evolution of a nonequilibrium system of primary defects, in which mobile point defects, vacancy loops, and sessile interstitial clusters are continuously produced by cascade-damage irradiation. It is shown that in a fully annealed metal, a spatially homogeneous microstructure may become unstable if the yield of vacancy clusters in collision cascades is sufficiently low. Unlike cases studied in the literature, in which sessile interstitial clusters are not produced, we found that the instability condition can only be satisfied for a finite period of time, the duration of which depends on the density of the network dislocation. Spatial heterogeneity starts to form from a homogeneous vacancy loop population, leading to the eventual accumulation of almost all vacancy clusters within very sharp walls. The spatial distribution of interstitial clusters, on the other hand, is relatively homogeneous, simply following the spatial variations of the net interstitial flux. The spatial heterogeneity develops with the growth of some concentration peaks and the disappearance of others. As a result, the surviving peaks form an increasingly well-defined periodic structure. Nevertheless, as the total sink density of interstitial clusters and loops becomes sufficiently large, the periodic structure disappears, and spatial homogeneity of damage microstructure eventually returns.