Investigators have said a tip-off to a national security hotline led to the raids in Melbourne yesterday, which found alleged improvised explosive devices to be used in an apparent terror plot.

Operation Amberd consisted of nine days of investigation prior to raids in Greenvale, which were conducted jointly by Australian Federal Police (AFP) and Victoria Police officers.

The raids led to the arrest of a 17-year-old male who has been charged. Police allege the teenager planned and prepared for a terrorist attack.

The teen cannot be identified and will face the charges in the Children’s Court.

“We don’t operate on luck – this was a methodical, measured and precise action,” AFP Deputy Commissioner Mike Phelan said.

“Let me tell you, something was going to happen.”

He claimed the intervening action taken by the AFP and Victoria Police had saved lives.

“We can absolutely guarantee we have stopped something.”

The accused was arrested when he left his Greenvale home around 12:30pm yesterday. Police later seized three alleged improvised explosive devices from the raided home and detonated them in a nearby park.

Police established a 300 metre exclusion zone and instructed people to stay within their homes as they completed the detonations.

Forensic crews in Hazmat suits entered the home of the accused earlier today as a part of continuing investigations.

Officers combed through the home, the remains of the detonated devices and other evidence seized during the initial operation.

Mr Phelan said the man’s family were shocked and distraught at their son’s arrest.

“These are extremely serious offences and they did involve the use of improvised explosive devices.

“It is deeply troubling to police that such young people are becoming disaffected in the way in which they are.”

Mr Phelan urged others to report suspicious activity on 1800 123 400.

A 14-year-old was reportedly also targeted in a raid in Sydney, although it is unclear if the operation was linked to the Melbourne arrests.

During the initial raids, heavily armed police approached a cream-coloured house with a loudspeaker and asked for the occupants to come out. Witnesses said the occupants emerged from the home dressed in traditional Islamic attire.

A man emerged first with his hands behind his head. He was placed on the ground before being taken to be secured in nearby parkland. Six women then emerged and were taken in the opposite direction.

Neighbours were in shock as streets were shut down with a heavy police presence.

Witness Katie Galea told 9NEWS the raid had hit "a bit close to home".

The detonations were conducted by specialist officers from the Victoria Police Bomb Response Unit. (AAP) (AAP)

"They had two robots. Police were asking if there was anyone else in the house to come out with their hands up," she said.

"I find it a bit scary... it's hit a bit close to home today."

The raids are not linked to the ongoing investigation to an Islamic State-inspired terror plot planned during Anzac Day events in Melbourne.

Neighbours were in shock as streets were shut down with heavy police presence. (9NEWS)