We show the existence of two-state on-off intermittent behavior in spatially extended dynamical systems, using as an example the damped and forced drift wave equation. The two states are stationary solutions corresponding to different wave energies. In the language of (Fourier-mode) phase space these states are embedded in two invariant manifolds that become transversely unstable in the regime where two-state on-off intermittency sets in. The distribution of laminar duration sizes is compatible with the similar phenomenon occurring in time only in the presence of noise. In an extended system the noisy effect is provided by the spatial modes excited by the perturbation. We show that this intermittency is a precursor of the onset of strong turbulence in the system.