A Melbourne youth allegedly in possession of manuals and materials used for home-made bombs could appear before the Supreme Court, after prosecutors convinced a judge of the seriousness of the case against the teen.

Investigators believe the 17-year-old was building a bomb and planning a terror attack when they seized manuals and materials used for improvised explosive devices, and propaganda material from al-Qaeda and Islamic State.

Steel piping with caps, a pressure cooker, nails and screws, a bulb from a set of Christmas lights and scrapings from matches were among the items seized by police during a May 8 raid, a children's court heard on Monday.

The youth, who cannot be named for legal reasons, is charged with one count of engaging in an act in preparation for, or planning, a terrorist act, and one count of possessing items connected to a terrorist act.

He appeared in court on Monday when prosecutors applied for the charges to be transferred to the Supreme Court, where the teen could face life in prison if convicted, rather than the maximum penalty of three years in youth detention the Children's Court can impose.