A Melbourne teenager discussed painting a kangaroo with the Islamic State group's symbol, packing it with explosives and letting it loose on police as part of an alleged terror plot on Anzac Day, court documents have alleged.

Sevdet Besim, 19, from Hallam, in Melbourne's outer south-east, pleaded not guilty to four charges relating to planning a terrorist act over the phone and internet in the lead-up to Anzac Day in Melbourne last year.

Prosecutors withdrew another charge of conspiring to commit the attack.

They also accused Besim of communicating with a teenager overseas, as well as planning to behead or run over a police officer on Anzac Day because the date would make the attack more memorable.

A summary of telegram communications allegedly between the two teenagers, presented by the prosecution, detailed a conversation about using a kangaroo as part of an attack.

"Communications resume in the early hours of Thursday 20 March 2015 with an image being sent by BESIM with a comment of 'look what I got ahaha'," the court documents said. "The conversation continues with BESIM detailing what he did that day and they have a general discussion around animals and wildlife in Australia including a suggestion that a kangaroo could be packed with C4 explosive, painted with the IS symbol and set loose on police officers."

Besim allegedly said: "Main thing I guess is that I send the dog to hell".

The prosecution alleged Besim conducted several internet searches in February 2015, including "Anzac day parade 2015", "shrine of Remembrance" and "Melbourne Anzac Day 2015".

Besim was remanded in custody to face the Victorian Supreme Court on February 3.