Terror operation entering new phase: AFP

Federal police warn a major operation into alleged terror plots across Australia is far from over, with more arrests expected as the case unfolds.

Police were still executing search warrants on Thursday evening and turning up backyards looking for weapons and evidence following the biggest anti-terrorism raids in Australian history.

The raids involved more than 800 police executing 25 search warrants on properties and cars across Sydney, with three strikes also on Brisbane homes linked to the NSW operation.

Sydney man Omarjan Azari is in custody, charged with preparing a terrorist plan involving what police alleged was "random selection" of members of the public for execution.

A second man was charged on Thursday night.

The 24-year-old from Merrylands in the city's west was charged with the possession of an unauthorised weapon and possessing ammunition without a licence.

He has been bailed to appear at Fairfield Local Court on September 24.

Australian Federal Police (AFP) acting commissioner Andrew Colvin declared the massive counter-terror operation was only just beginning.

"In many ways it's just a new phase," he told ABC TV on Thursday.

Fifteen people including the two who were charged were arrested in dawn raids on a dozen suburbs across Sydney, but police expect that number to grow as more evidence is uncovered.

Acting commissioner Colvin said police would take their time digging up backyards and combing homes for "hides" - stashes of cash or firearms that could have been hidden.

He justified the timing of the raids, saying police had to balance the protection of the community with the need to gather vital evidence and build a case.

"In this case we felt we could no longer manage the risk to the community, so therefore we took action today," he said.

Police allege Azari conspired with a senior figure from terrorist group Islamic State to commit random public beheadings in Australia as "demonstration killings".

Acting commissioner Colvin said beheadings were a threat, but not the only violence being considered.

"I think random acts are a police officer's worst nightmare," he said.

"They're very difficult for us to identify, they're very difficult for us to take action quickly to stop them."

But he said today's raids were evidence that law enforcement were disrupting homegrown terror plots.