As thousands of revellers flooded towards Australia's most iconic New Year's Eve fireworks display, detectives worked feverishly to block a terrorist attack.

It was an impending threat Sydney police were determined to not let escalate in 2003, having established Operation Pendennis - Australia's biggest ­ever counter­terrorism investigation.

Details of the night and the effort from investigators to keep the public safe have been revealed for the first time ever by Counter Terrorism Investigations Unit officer Detective Sergeant Peter Moroney, Daily Telegraph reports.

Det Sgt Moroney recalled the night he and more than 100 police officials tracked the activity of a dangerous group of radicals, who they suspected had plotted a catastrophic terror attack.

'You sit there thinking, you have no idea what is ­potentially about to come your way,' he said.

As thousands of revelers flooded towards Australia's most iconic New Years Eve fireworks display in 2003, detectives worked feverishly to block a terrorist attack

Police established Operation Pendennis - Australia's biggest ­ever counter-­terrorism investigation which led to the subsequent arrest of Mohammad Omar Jamal (left) and Abdul Rakib Hasan (right)

The 44-year-old was one of a large task force of officers allocated to investigate a man he called 'Mahmoud' - a criminal-turned-Islamic radical.

The young Muslim man became involved in organised crime and was radicalised while serving time in jail, and later connected with Khaled Sharrouf, the notorious Islamic State supporter killed fighting in Syria.

Alarm bells first rang for Det Sgt Moroney when he passed Mahmoud towing a boat behind his car in December.

'You tortured yourself in your own head thinking, ''Don't be an idiot, the poor guy is towing a boat. Who cares?'',' he said.

But his police instinct kicked in and he knew better than to ignore it, given he was familiar with the growing hatred Mahmoud had for the West.

Khaled Cheikho (left) is the uncle of Mustafa Cheikho (right) - both are serving prison sentences

Alarm bells first rang for Det Sgt Moroney when he passed Mahmoud towing a boat behind his car in December - weeks before Sydney's famous fireworks display

A tracker on his car told police he had visited vantage points around Sydney Harbour in the fortnight before New Year's Eve.

The detective noted Mahmoud took his boat out at 11pm with Moustafa Cheikho, Khaled Cheikho, Omar Jamal and Abdul Rakib Hasan nine days out from New Year's Eve.

The group later formed what became known as the Pendennis Nine, a notorious Sydney terror cell that amassed bomb-making materials and weapons in 2005.

At one point, water police pulled up alongside the group of men huddled inside the boat at sea, who said they were fishing.

Mr Moloney explained the bizarre nature of the situation was heightened because there was no fishing gear or bait inside the vessel.

The detective (pictured) noted Mahmoud took his boat out at 11pm with Moustafa Cheikho, Khaled Cheikho, Omar Jamal and Abdul Rakib Hasan nine days out from NYE

Leader of the Sydney cell Mohammed Elomar (left) and Mazen Touma (right) who has been deradicalised in prison and released

They later learned Mahmoud had acquired a second vessel, and the race was on to find it before the famous fireworks started.

When it came to the day of New Year's Eve tensions flared as officers across the city worked to to locate the second boat - some kept watch on his house and car, while PolAir and the elite tactical operations unit were on standby.

An oil tanker due to arrive in the harbour was diverted earlier in the day, at a cost of about a quarter of a million dollars because it was perceived to be a potential target.

It was decided if Mahmoud's second boat wasn't found by 9pm, officers would confront him and ask him personally.

When asked however, Mahmoud denied having it and claimed he had sold it on.

Later in the evening after going through old phone records, Mahmoud's phone was recorded being used in a suburb in Sydney’s southwest, where the boat was eventually found.

Mahmoud connected with Khaled Sharrouf (pictured), the notorious Islamic State supporter killed fighting in Syria after serving prison time

Mr ­Moroney and his offsider found the vessel, which was barely sea worthy, and they were immediately stood down.

While it was never exactly discovered what Mahmoud's plan for that night was, extensive detective work in the lead up as part of Operation Pendennis led officers to his dangerous friends.

In 2005 Mr ­Moroney and his team ­arrested Cheikho, Jamal, Hasan, Sharrouf and Mohamed Ali Elomar - all who were intertwined in the country's biggest terrorism plot.

The men were part of terror cells in Sydney and Melbourne which conspired terror attacks.

Detailed information about how the bust unfolded has been documented in Mr Moroney's book, Terrorism in Australia: The Story of Operation Pendennis, which will hit shelves next week.