Australia mounts largest ever counter-terrorism raids

A major pre-dawn operation was carried out across Sydney and Brisbane by more than 800 officers. Some 25 search warrants were executed with one person so far charged with serious terrorism-related offences.

He was to appear in court later in the day. At least one gun was seized.

The operation, which spanned multiple suburbs, came barely a week after Australia raised the terror threat level to "high" for the first time in a decade on growing concern about militants returning from fighting in Iraq and Syria.

Asked if those held were related to the Islamic State jihadists who have been cutting a path through Iraq and Syria, police said the full details would emerge during court appearances.

"Police believe that this group that we have executed this operation on today had the intention and had started to carry out planning to commit violent acts here in Australia," federal police chief Andrew Colvin said.

"Those violent acts particularly related to random acts against members of the public."

This prompted comparisons to the murder of British soldier Lee Rigby, who was hacked to death in a random attack on a street in England last year by two Muslim converts.

The Australian Broadcasting Corporation said court documents were expected to reveal that the plan involved snatching a random member of the public in Sydney, draping them in an Islamic State flag and beheading them on camera.

Asked whether this was the case, Colvin replied: "That allegation will relate to serious violence on a random member of the public here on the streets of NSW (the state of New South Wales).

"Let's let it run its course in court."

The Australian government believes up to 60 Australians are fighting alongside jihadists for Islamic State, while another 100 were actively working to support the movement at home.

Immigration Minister Scott Morrison, who sits on Australia's national security committee, said the raids demonstrated "the very real threat" facing Australia.

"I think the scale of what we're seeing in this ongoing operation this morning... I think demonstrates the very real threat that's there and the incredibly good work which is being done by our agencies," he said.

"And I think it again supports why the government has been so strong in its response to this threat."

The latest raids followed the arrests of two people last week in Brisbane who were charged with allegedly recruiting, funding and sending jihadist fighters to Syria.

And, on Wednesday, a Sydney-based money transfer business was shut down amid concerns it was being used to funnel funds to the Middle East to finance terrorism.

NSW Police Commissioner Andrew Scipione urged calm.

"Right now is a time for calm. We actually need to let people know that they are safe," he said.

Last week's decision to raise the terror threat level after years on "medium" officially means a "terrorist attack is likely", and comes after repeated government warnings that attacks could happen.

The raising of the threat level was "not based on knowledge of a specific attack plan but rather a body of evidence that points to the increased likelihood of a terrorist attack in Australia", Prime Minister Tony Abbott said at the time.

"Security and intelligence agencies are concerned about the increasing number of Australians working with, connected to, or inspired by terrorist groups such as ISIL (Islamic State), Jabhat Al-Nusrah, and Al-Qaeda," he said.

"The threat they pose has been increasing for more than a year."