Sydney 'beheading plot' could have taken place within days, PM says

The Prime Minister said a foiled plot to kidnap and publicly behead a member of the public on the streets of Sydney could have taken place within days.

7News reporter Robert Ovadia revealed on Thursday sickening details of the alleged plot to kidnap a random person from the streets of Martin Place in Sydney's CBD, and film their public beheading.

The alleged intention was to post the footage to social media, with the victim's body draped in an Islamic State flag.

“The advice of our police and security agencies was that an attack of this nature could take place within days," Prime Minister Tony Abbott told the media on Friday.

Mr Abbott also confirmed that Parliament House in Canberra is a possible target for terror attacks.

Security at Parliament House has been ramped up after senior intelligence sources, police and counter-terrorism agencies intercepted information regarding a possible plot.

"As a result of intelligence there was an urgent review conducted a week or so back of security at Parliament House," the Prime Minister told Seven's Sunrise.

"Parliament House certainly is a potential target. There has been chatter amongst terrorist support networks for some time".

"As a result of that review, the Australian Federal Police will be taking over security, both inside the building as well as outside the building."

"The regrettable reality is that to mount the kind of attacks which ISIL in Syria and in Iraq has in mind for Australia, all you need is a determined individual who will kill without compunction, a knife, an iPhone and a victim," he said.

Dawn raids: A map of the areas targeted during Australia's largest ever terror raids. Photo: 7News

The Prime Minister said the majority of Australian Muslims are decent people, and urged for calm.

"The best response to all of this is go about one's business normally."

Backyards will be upturned and homes searched on Friday as the largest anti-terrorism raids in Australia's history continue.

The Australian Federal Police (AFP) has not ruled out further arrests following raids in Sydney and Brisbane on Thursday.

Police are expected to continue searching some properties on Friday as part of the major operation into alleged terror plots.

AFP acting commissioner Andrew 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 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.

Following dawn raids in Sydney on Thursday Sydney man Omarjan Azari has faced court charged with preparing a terrorist plan involving what police alleged was "random selection" of members of the public for execution by beheading.

A 24-year-old from Merrylands in Sydney'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.

Two women were also issued with court attendance notices.

Nine people were released from custody in Sydney while others were detained for questioning.

More than 800 police executed 25 raids in 12 suburbs.

IS leader accused of Sydney terror plot

Mohammad Baryalei is considered to be a senior IS figure.

Omarjan Azari allegedly conspired with senior IS figure Mohammad Baryalei and others "to do acts in preparation for, or planning, a terrorist act (or acts)", court papers show.

Prosecutor Michael Allnutt told Central Local Court that Azari, 22, hatched plans designed to "shock" and "horrify" the community, and that they involved the "random selection of persons to rather gruesomely execute".

It's believed they intended to choose a random person on a Sydney street and execute them.

Azari has been charged with acting in preparation for a terrorist act, a charge defence barrister Steven Boland said related to a single conversation.

"The allegation is based on one phone call," Mr Boland said.

Court papers suggest the phone call was made in the early hours of May 8.

Since then, Azaria has allegedly conspired with Baryalei and others to commit a terrorist act.

Baryalei is reportedly a Kings Cross bouncer and occasional actor, responsible for recruiting at least half of the 60 Australians currently fighting in foreign conflicts with IS.

Azari, from Guildford in Sydney's west, was captured as NSW Police and federal officers swooped across the city before dawn on Thursday.

A large number of sheriffs guarded Azari in the dock before his lawyer requested he be returned to the cells.

Azari did not apply for bail and it was formally refused before he was whisked from the court in a two-car convoy.

A sword found in raids in Marsfield on Thursday. Photo AAP

He was seen leaving court in an orange jumpsuit with his head down between his legs in an unmarked 4WD.

A corrections officer was in the front passenger seat holding a pump-action shotgun.

An arrest warrant was issued last week for Baryalei for alleged terrorist activities.

His parents have told the ABC that their son is living peacefully in Turkey.