Alleged terror plotters 'planned to hide bomb in innocent passenger's carry-on luggage'

An alleged terror plot to bring down a plane departing Sydney may have involved smuggling a bomb into the bag of an innocent passenger.

It's reported the device, possibly a bomb that would emit a poisonous gas, was to be smuggled onto the plane in the carry-on luggage of an innocent passenger.

According to the theory, if successful, the unwitting passenger would have been killed, along with all those on board, when the device was detonated.

But the plan came unstuck when it was determined the device would have been too heavy for cabin baggage, according to News Corp.

Huge queues are seen at Sydney Airports T2 Domestic Terminal as passengers are subjected to increased security measures. Source: AAP

"The person was going to be blown up without knowing they were part of a suicide mission," a source told News Corp Australia.

The Australian Pilot's Association are calling for private security contractors to be replaced and baggage checks by government security.

Police spent Wednesday searching a terrace in Surry Hills and removed what sources describe is an item of interest.

It follows the release of one of the four men arrested.

The Australian Federal Police advised on Wednesday morning that a 50-year-old man, Abdul Merhi, was released on Tuesday night without being charged.

Mahmoud Khayat, Khaled Khayat and Khaled Merhi remain in police custody as counter-terrorism police continue to investigate an alleged plot to bring down a plane after raids on four Sydney properies on Saturday.

The men are being held under 'specified time' provisions outlined in Commonwealth Crimes Act.

An Australian Federal Police forensic officer enters the main door of a building in Lakemba. Source: AAP

A terror expert believes the alleged terror plot may have centred around using a gas referred to as the “Mother of Satan”.

Deacon University terror expert Greg Barton suggests the alleged plan may have centred around acetone peroxide, or TATP, the same chemical used in the Manchester Arena bombing in May and the 2015 Paris attacks.

Referred to as the "Mother of Satan" because it can kill those handling it, TATP is unstable but powerful and would not give off "tell-tale" chemicals picked up by airport swab tests, Prof Barton said.

"That makes it a candidate for using in this sort of attack."

Khaled Khayat, one of three men still under investigation. Source: 7 News

TATP, which needs a pressure vessel to be packed in, could be placed in a grinder so it was opaque through an X-ray machine and appeared innocuous upon visual inspection.

"It might just pass (security)," Prof Barton said.

"That, I'm guessing, was their plan," he alleged.

Prof Barton speculated while the alleged plot could have succeeded it more likely would have failed because the bomb would have been detected, failed to detonate or not have detonated to its full potential.

On Saturday night, four men were arrested in counter-terror raids conducted in four suburbs across Sydney. Photo: AAP

"(Still) it's important to understand this clearly is the most sophisticated [alleged] terror plot we've had, probably ever, in Australia," he added.

News agency Reuters on Tuesday cited two US officials familiar with the arrests as also saying the Australian investigation wasn't a sting operation but the result of the detection of a developing plot.