The brother of Hassan Khalif Shire Ali, the man who killed restaurant owner Sisto Malaspina in last year's Bourke Street terror incident, has pleaded guilty over a plot to gun down New Year's Eve revellers at Federation Square.

Ali Khalif Shire Ali, 22, was preparing to stand trial in the Supreme Court but on Wednesday pleaded guilty to a single terrorism charge over his planned massacre.

Ali Khalif Shire Ali in November 2017. Credit:Joe Armao

Ali was arrested in November 2017 and police at the time believed he planned to arm himself with an automatic rifle and shoot as many people as he could on December 31 that year.

The then-university student, an Australian-born Muslim, was arrested not far from his Werribee home and has been in custody ever since. He had been monitored by police for months before his arrest.