A Melbourne court has heard a man accused of terrorism-related offences spoke of preparing for war before his arrest in anti-terrorism raids last year.

Adnan Karabegovic, 24, is facing 12 charges of possessing four editions of the online magazine Inspire. The publication is produced for Al Qaeda.

The court heard Karabegovic was found in possession of a USB stick containing the magazines which contained articles on "open jihad."

The articles included instructions on how to make bombs using everyday household items, making petrol bombs to spark bushfires, becoming an urban assassin, poisoning water supplies and the killing of women and children.

There were also articles showing rifle stances alongside a picture of the Sydney Opera House and ideas on how to get scientists to make weapons of mass destruction.

The prosecution told the court that in January 2012 Karabegovic unfurled a banner that said "Get your troops out of Muslim lands you filthy Kafir" from a freeway overpass.

A second banner stating "Get your troops out of Muslim lands you filthy convict pigs" was also draped off a telephone exchange.

The court heard in secretly-recorded conversations, Karabegovic spoke to other people about planning for war and his attempts to buy a gun.

He also spoke of the permissibility of the mujahideen and of troops being sent to "kill our brother and sisters."

"There is no choice. You are either preparing for war, or at war," he told a friend in a recording.

In later conversations, he talked about defending Islam, the need for action and about the possibility of travelling to Bosnia.

Prosecutors alleged Karabegovic knew he was under surveillance but did not care.

The court heard that in a police interview after his arrest he stated the USB belonged to his parents and he was only interested into the current affairs articles in the magazines

Karabegovic is contesting all 12 charges.