Federal and state government "entities" in Sydney have allegedly been named as potential terror targets in documents seized during an AFP investigation which saw two men arrested.

Australian Federal Police said members of the Joint Counter Terrorism Team made the arrests late on Tuesday with New South Wales Police as part of Operation Appleby.

Sulayman Khalid, 20, from Regent's Park was charged with possession of documents designed to facilitate a terrorist attack, while a 21-year-old man from Marsfield was charged with breaching a control order.

Khalid, who also goes by the name Abu Bakr, attracted media attention when he stormed off the set of SBS's Insight program earlier this year during a forum on Australians being drawn into foreign wars in Iraq and Syria.

If found guilty, Khalid could face a maximum 15 years in jail.

Security was stepped up outside Parramatta Local Court ahead of court appearances by both men on Wednesday.

Khalid did not apply for bail, and it was formally refused when he appeared in court via video link.

Federal police claimed they seized documents from his home during raids last week that detailed potential government terror targets.

The 21-year-old Marsfield man, who can not be named for legal reasons, was refused bail.

Both men will face court again in February.

Documents 'name potential targets in Sydney'

AFP Deputy Commissioner National Security Michael Phelan said police allege the documents named potential targets in Sydney.

"Certainly the documents talked a little bit about potential government targets and so on," he said.

"[There were] no threats at all against the Prime Minister but some of the potential targets written in the documentation were around Federal and State Government entities.

But the Commissioner said there was no evidence that a terror attack was imminent.

"There is nothing that indicates any specific targets or time frame in relation to this particular activity at all," he said.

"We just want to reassure the community that as soon as any information or activity comes before us we will take swift action."

Deputy Commissioner Catherine Burn said their investigation was not over.

NSW Police Deputy Commissioner Catherine Burn (L) and AFP Deputy Commissioner Michael Phelan (R) speak about the arrests. ( AAP )

"We are very, very confident in what we have been able to achieve in making sure we disrupt any activity, any threat to the safety of any person in New South Wales and this country," she said.

"This is all about disruption. We are now faced with a new environment."

Commissioner Burn said there would be more police in public places over the holiday season.

"We have placed 11 people [since September] before the court, some of these are for serious terrorism offences," she said.

"As we move into Christmas and the new year that investigation will continue.

"There will be a heightened police presence in public places."

She said there would a large police presence on New Year's Eve to ensure safety.

"The reason for our success is because people give us information," she said.

"It's really important when people go about their daily activities if they see anything suspicious [they let us know]."



"Anything at all, we can put together, fill a jigsaw puzzle and it may help."

Operation Appleby is a joint operation involving NSW Police, AFP and ASIO.

The investigation is focused on the alleged planning of a terrorist attack on Australian soil and helping Australians travel to Syria to fight.

In September, 15 people were detained when up to 800 officers carried out counter-terrorism raids across suburbs in Sydney's west.

Properties were also raided in Brisbane, involving a further 70 police officers.

At the time, police said the Sydney raids foiled a plot to "commit violent acts" in Australia, including a plan to behead a member of the public.

Heightened level of 'terrorist chatter', Abbott says

Prime Minister Tony Abbott on Tuesday warned of a heightened level of "terrorist chatter" in the aftermath of the Martin Place siege and reminded Australians that the national terrorism alert level remained on "high", which means an attack is "likely".

But the deputy chairman of Parliament's Joint Committee on Intelligence and Security, Anthony Byrne, said the terror alert level should be raised.

"On the basis of recent events both here in Australia and overseas, and provided information that the Prime Minister spoke about was sound and accurate, there is a strong case to raise the terror threat to extreme as quickly as possible," he told Fairfax media.

Police had a presence at Parramatta Local Court ahead of appearances by two men arrested in counter-terrorism raids. ( Supplied )

Raising the alert level to extreme would mean a "terrorist attack is imminent or has occurred".

But the chairman of Parliament's Joint Committee on Intelligence and Security, Dan Tehan, rejected the view of his deputy.

"What the Government needs to do is take the advice of the experts," he said.

"I am absolutely certain that our intelligence agencies and the Australian Federal Police are monitoring this and would advise the Government if it did need to be raised to a higher level."

Foreign Minister Julie Bishop has confirmed the latest advice is that the official threat level should remain at high.

"Our security and intelligence agencies have assessed that an attack is likely," she told Channel Seven.

"It's not at the next level 'extreme' which means imminent, in other words, they have details of an attack that is likely to take place and where it will take place. So we're just warning people to be careful, be alert."

In France, up 300 extra soldiers have been put on patrol in public places over the holiday period following three seemingly random attacks in as many days.

Ms Bishop said French authorities are "obviously assessing that situation very carefully."

"But I just want to stress in Australia our law enforcement and intelligence agencies are working very hard to ensure that we are able to disrupt the activities of people who might be planning this kind of activity," she said.

"We're just warning people to be careful, to be alert but of course go about your everyday business and of course over the Christmas break we want people to be relaxed."