A western Sydney student accused of planning a terrorism act in Sydney allegedly knelt before an Islamic State flag and pledged to stab the kidneys and necks of Australians.

The Prime Minister, Tony Abbott, told Parliament on Thursday that security agencies showed him the video in which the alleged pledge is made.

'Monstrous extremism': Prime Minister Tony Abbott during question time at Parliament House on Thursday. Credit:Andrew Meares

Omar Al-Kutobi, 24, and Mohammed Kiad, 25, were arrested on Tuesday just hours before police say the alleged plot to kill someone using a knife was to be carried out.

Police stormed their Fairfield granny flat, seizing a machete, a hunting knife, a homemade Islamic State flag and a video indicating an Islamic State-inspired attack would occur that day.