As Australians gathered to celebrate Christmas in Melbourne in 2016, aspiring terrorist Ibrahim Abbas was plotting to kill.

He wanted to run down a police officer, use a machete to chop and kill Australian citizens, and if that plan failed, detonate a suicide vest in the middle of Federation Square.

The place and time had to be significant, somewhere that would "instil fear the most", the confessed terror conspirator told police before turning on his family and friends.

The accused trio faced court earlier this year. (9NEWS)

Ibrahim Abbas, 24, is giving evidence in the Supreme Court against his younger brother Hamza Abbas, 23, cousin Abdullah Chaarani, 27, and Ahmed Mohamed, 25.

Chilling details of his plan have been revealed through Ibrahim Abbas's police interview after his arrest on December 22, 2016.

"I was gonna run at them, slice their necks," he said.

He talked of "chopping to kill" people with a machete and a backup suicide vest "so if police subdue me, I at least have that chance to take someone with me".

Federation Square in Melbourne.

He'd seen one used in an Islamic State video where a Kurdish prisoner had been "shredded".

He told Australian Federal Police officers he had tried to recruit Hamza Abbas, Chaarani and Mohamed because a group could do more.

He said they had been discussing the plan for a month, but he had been hinting to Chaarani for two years.

"(A bomb-making video) put things into perspective. It's not as hard as we thought it was and so, um, we started preparations," he said.

He claimed Chaarani and Mohamed were involved in discussions and on the day he intended to bring along Hamza Abbas and "I would put a vest on him".

Ibrahim Abbas said his goal was to "cause as much chaos, destruction, fear, bloodshed" as possible.

Hamza Abbas, 23. (aap)

It was intended as a revenge attack for the deaths of Muslims killed in the fight against Islamic State.

"So because Australia kills Muslims, OK, therefore I believe it's fine for me to kill Australians," he said.

He discussed buying machetes, confessing it was because "it's not hard to kill a person with a machete, it just takes one slice to the neck".

There were also failed attempts to make an explosive device, and scouting of other possible locations including St Kilda beach.

He also revealed he'd ordered nothing be written down and that the accused men keep items intended to be used in the attack.

"It sounds a bit selfish but that's just me taking my own precautions," he said.

Hamza Abbas, Chaarani and Mohamed deny conspiring with Ibrahim Abbas to prepare an attack.

The trial continues.