The emerging reality of terrorism in Australia struck home just before dawn on Thursday when more than 800 police launched synchronised raids on houses and vehicles across Sydney's west and north-west, and Brisbane's south.

The raids foiled a plot involving a man believed to be Australia's most senior Islamic State member who called contacts in Australia and asked them to carry out a campaign of random public beheadings in Sydney and Brisbane, the ABC understands.

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Mohammad Ali Baryalei, a former Kings Cross bouncer and part-time actor, is understood to have made the instruction to kidnap people in Brisbane and Sydney and have them executed on camera. That video was then to be sent back to IS's media unit, where it would be publicly released.

Omarjan Azari, 22, from the western Sydney suburb of Guildford, was one of 15 people detained during the operation in Sydney and is accused of conspiring with Baryalei and others to act in preparation or plan a terrorist act or acts, court documents show.

Commonwealth prosecutor Michael Allnutt told Sydney's Central Local Court the alleged offence was "clearly designed to shock, horrify and terrify the community".

Mr Allnutt said there was "a plan to commit extremely serious offences" that involved an "unusual level of fanaticism".

He said the plot involved the "random selection of persons to rather gruesomely execute" and said there was an "irrational determination to commit that plan" because those allegedly involved continued to plot the attacks even though they knew they were under police surveillance.

The court was told the charges against Azari stemmed from a single phone call intercepted earlier this week and police made their move this morning to disrupt a group of mostly Afghan Australians 48 hours after that phone call, concerned at how close it was to going ahead.

"It's been an immediate reaction to a clear, imperative danger," Mr Allnutt said. "There is still an enormous amount of material for police to assess."

There was heightened security at the court for Azari's appearance.

The prosecution opposed bail, saying the unusual level of fanaticism meant Azari would be unlikely to adhere to any court orders.

His barrister Steven Boland told the court police have very little evidence to support the charge, except for one phone call.

Azari did not apply for bail and the case was adjourned until November 13.

A 24-year-old man from Merrylands, who was charged with possessing ammunition without licence and unauthorised possession of a prohibited weapon, has been bailed to appear in Fairfield Local Court on September 24.

Two others remain in police custody and two women were issued Future Court Attendance Notices.

Nine other people detained on Thursday have been released as investigations continue.

Brandis says authorities became aware of plot in May

The charge relates to activity from May this year, well before the Federal Government publicly spoke about sending troops to fight IS in Iraq.

"The law enforcement authorities became aware of information in May of this year that a group of people in Sydney were at least talking about plans to carry out random attacks on individuals in Australia and they were kept under surveillance," Federal Attorney-General George Brandis told Macquarie Radio.

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"I want to stress that the AFP acted at the earliest opportunity that they could when they had sufficient evidence to charge an individual."

He said despite today's raids he wants people to continue with their normal way of life, but be more aware of the heightened threat.

Prime Minister Tony Abbott said he was briefed on Wednesday night about the operation, adding that the intelligence received by police gave "not just suspicion" but "intent".

"The exhortations, quite direct exhortations, were coming from an Australian who is apparently quite senior in ISIL to networks of support back in Australia to conduct demonstration killings here in this country," he said, using another acronym for IS.

"That's why the police and security agencies decided to act in the way they have.

"There are, I regret to say, networks of people here in this country who, despite living here, despite enjoying the Australian way of life, they would do us harm and it's very important that our police and security organisations be one step ahead of them and I think this morning they were."

Investigations involving federal, state police, ASIO continuing

Federal Police said they do not want to alarm people, but they are concerned about the momentum the Islamic State group seems to be gaining in Australia.

AFP Acting Commissioner Andrew Colvin said Azari was the ringleader of a bigger group that planned to commit violent acts in Sydney and Brisbane.

He said the young age of the accused man and others under investigation was of particular concern.

"I think it's fair to say we are concerned, now I don't want to unnecessarily alarm the public but we have seen the reach of ISIL, the reach of the conflicts in the Middle East into countries like Australia, in through our communities ... it's quite strong and it's concerning," he said.

"We are seeing that younger and younger men are deciding to take up arms or wanting to participate or in some way contribute to the cause."

Acting Commissioner Colvin said the investigation was ongoing.

"We'll continue to collect evidence, we won't stop here. This is the first of a new phase of the investigation and we do anticipate further arrests and further charges."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 7 minutes 48 seconds 7 m Acting AFP Commissioner Andrew Colvin speaks to 7.30

NSW Police Commissioner Andrew Scipione said the raids reflected "the reality of the threat we actually face".

"You know it is of serious concern that right at the heart of our communities we have people that are planning to conduct random attacks," he said.

"Today we work together to make sure that didn't happen. We have disrupted that particular attack.

"Our police will continue to work tirelessly to prevent any such attacks but certainly can I stress that right now is a time for calm. We don't need to whip this up."

A man who has previously been accused of recruiting people to fight in Syria is among those detained in the Sydney raids.

The ABC has confirmed a house being searched at Revesby, in Sydney's south-west, is the part-time home of Hamdi Al Qudsi.

The 39-year-old was charged last December with recruiting people to fight in the hostilities in Syria.

Federal Police and detectives with shovels, suitcases and what is understood to be metal detectors spent several hours searching the public housing property.

It is understood officers were also inspecting chemicals found at the house.

Al Qudsi is yet to enter a plea to the recruitment charges and will face court again next month.

Queensland operation linked to raid on Islamic bookstore

Queensland Police said Thursday's operation has links to last week's raids centring on an Islamic bookstore in Logan, to Brisbane's south.

Two men were arrested in those raids and charged with recruiting and funding foreign fighters with Al Qaeda-linked terrorist organisation Jabhat al-Nusra. There were no arrests in today's raids.

At the time, police said there was no evidence they were involved in any domestic terror plot. But today it emerged new information had come to light.

"It may now be alleged that at least one individual was contemplating onshore terrorist action," Queensland Premier Campbell Newman said.

Queensland Police Commissioner Ian Stewart said the "information that has been gathered, particularly in the last week, has been very, very concerning".

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He said police are on high alert and officers have been ordered to wear their guns and carry Tasers as a precaution. Heightened security is also in place for government buildings and religious centres.

"So that we are more prepared to deal with any eventuality," Mr Stewart said.

"Now I want to stress there is no current information about an imminent attack on any particular Queenslander or group of Queenslanders. I want to stress that.

"We are continuing to monitor the intelligence that's coming nationally about the activities of individuals."

Meanwhile a Brisbane man accused of supplying funds to a terrorist organisation in Syria has been denied bail.

Omar Succarieh, 31, is charged with collecting or making funds available to Jabhat al-Nusra between August 2013 and September 2014.

He has also been charged with preparing for incursions into a foreign state between February and March this year.

It was claimed police recordings show he favours Jabhat al-Nusra executions because they put a grave in front of their victim and the victim dies without struggle.

Islamic groups fear arrests could prompt backlash

About 200 people from Sydney's Muslim community held a protest against the raids outside Lakemba station on Thursday night.

The group heard claims of police brutality and political hysteria, and the speakers included children who said they witnessed one of the raids. One said he and his mother were assaulted.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 9 minutes 42 seconds 9 m Muslim community activist Dr Jamal Rifi discusses the raids

Uthman Badar from the Islamic Hizb ut-Tahrir movement said the Muslim community was "not new to these sort of heavy-handed raids", which he described as "politicised counter-terrorism".

However, Muslims Australia vice-president Ikebal Patel said the terrorism threat was a reality.

"We actually have to deal with that and the Government has to deal with it in a fair manner and a just manner," he said.

"But also the communities involved in this, and indeed the Australian Muslim community, has to rise to the challenge to attend to this matter ... to reject terrorism, radicalisation."

Earlier he said he was shocked to hear of the raids and would not prejudge those arrested.

"The premise of innocent until proven guilty stands, but having said that, for the police to take such a strong action, we of course are concerned that there could be some untoward thoughts and ideas amongst the community," he said.

"We'd like to ask for calmness from within both the Muslim community as well as the greater community whilst the investigations are actually carried out fully.

Silma Ihram from the Australian Muslim Women's Association said she was concerned the arrests could prompt retaliation against Muslim men and women.

Sorry, this video has expired Terror raids prompt mixed response from Muslim community

"We have some criminals in our society at all times, be they Muslim or not Muslim," she said.

"But if you target a whole community as being part of the same grouping, simply because of the way they look or the hijab that they wear, this is going to isolate a whole community, this is going to cause long-term problems for everybody.

"We are all, all those people who are Australian citizens, who are committed Australian citizens against the ... very, very few people that are under surveillance by the Government and who are threatening our security and our safety.

"And I say our because they don't distinguish between Muslims and non-Muslims, unfortunately, as we've seen overseas.

"So to isolate and to react negatively against a whole community on the basis of a few isn't going to be helpful to anybody. I understand where it's coming from, but it's not going to provide a solution."