Sevdet Besim pleaded guilty to planning a terrorist act. It's understood the defence will apply for bail for the young man, who is now being held in an isolation cell in an adult prison. Mr Causevic was one of three young men arrested and charged as a result of raids described at the time as having foiled a plot to run down a police officer, take his gun and then go on a shooting rampage. Another, Sevdet Besim, remains in custody. The dropping of the charges against Mr Causevic will be embarrassing for authorities, but it underlines the serious difficulty police have in when to move against people they suspect of planning an attack, and when to charge them.

Harun Causevic's father Vehid leaves court after a hearing in May. Credit:Eddie Jim After the April 18 raid, Mr Causevic was placed on a preventive detention order – the first time such an order was issued in Victoria – before being charged with conspiring to do an act in preparation of a terrorist act. In affadavits sworn in the case already, federal agents have alleged that Causevic was nearby when his friend, Numan Haider, was shot by police at Endeavour Hills police station last year after he tried to stab two officers. They've also said that Mr Causevic was seeking an Australian passport, and had sought to obtain weapons, including knives. Police have told the Melbourne Magistrates' court that, in April this year, Causevic had driven down St Kilda Road in actions "consistent with reconnaissance at the Shrine of Remembrance," and had produced a black flag with white Arabic writing on it and "waved it ... at a Victoria police officer".

He was also said to have been "observed conducting surveillance" on two police members at a McDonalds store, and to have spat on the side of a police divisional van. The alleged plot prompted a serious upgrade in security for Victoria police, who are now required to wear their gun and bulletproof vest when staffing the desk at a police station, and to patrol in groups. The third man arrested, Mehran Azami, 19, was never charged with terror offences, but has since pleaded guilty to importing weapons including knives and knuckledusters, and has been remanded in custody to be sentenced. His lawyer, Charles Atlas, said he would recommend his client sue for defamation after media outlets associated him with terror. In late July, a 15-year-old British boy pleaded guilty to incitement after telling Mr Besim via a social media messaging app to break into someone's home and "get your first taste of beheading".

Much of the evidence against Mr Besim involves his interactions with the boy, and statements he made. The Australian Federal Police referred queries to the Commonwealth Director of Public Prosecutions, who declined to comment on the basis that the case was before the court on Tuesday. On the day of the arrests, AFP acting deputy commissioner Neil Gaughan said: "Some evidence that we've collected at a couple of the scenes – and some other information we have – leads us to believe that this particular matter was ISIS inspired." Mr Abbott said two people would be charged with terror offences as a result of the raids, and Mr Andrews said: "the system has worked and that's why these people are in custody now".