UPDATE: The planned flare drop over Port Phillip Bay has been cancelled because of technical probelms with the RAAF plane.

The airforce says the C-130J Hercules, which was due to fly over Port Phillip Bay towards St Kilda around 8pm this evening as part of an anti-terrorism exercise, has returned to its base at Richmond in New South Wales.

The flare display was to recognise this month's 10th anniversary of continuous deployment of Australian Hercules to the Middle East, the longest such deployment in RAAF history.

The C-130J is to be part of the Australian International Airshow at Avalon Airport from Tuesday.