Australian counter-terror police (file)
Australian counter-terror police (file) Reuters

Two Muslim men were charged in Australia Wednesday after police thwarted an "imminent" terror attack, seizing an Islamic State (ISIS) flag, a machete and an Arabic-language video detailing the alleged plot during a raid in Sydney.

New South Wales Deputy Police Commissioner Catherine Burn said the planned attack was "consistent with the messaging coming out of IS(IS)," while New South Wales state Premier Mike Baird described it as "beyond disturbing."

Asked whether the plot involved a beheading, Burn said police were as yet unsure, but that it had been due to happen Tuesday in Sydney, and would likely have involved a knife.

The men, Omar Al-Kutobi, 24, and Mohammed Kiad, 25, were arrested in a raid on a property in the city's western suburbs by the Joint Counter Terrorism Taskforce on Tuesday after a tip-off, and charged with making preparations for a terrorist act.

Reportedly devout Muslims, they were refused bail with the case adjourned until Thursday due to security issues.

"A number of items were located including a machete, a hunting knife, a home-made flag representing the proscribed terrorist organisation IS(IS), and also a video which depicted a man talking about carrying out an attack," Burn said.

"We will allege that both of these men were preparing to do this act yesterday. We built up information, we received further information which indicated an attack was imminent. And we acted," he added.

In September Australian police shot dead a "known terror suspect" armed with two knives who stabbed two officers in Melbourne, a day after ISIS called for Muslims to indiscriminately kill Australians.

Attorney-General George Brandis told parliament the video seized allegedly showed "one suspect kneeling in front of an ISIL (ISIS) flag, with the knife and machete, making a politically motivated statement, threatening to undertake violent acts with those weapons."

Australian Prime Minister Tony Abbott said the video was in Arabic and that "regrettably there are people out there, some living in our midsts, who would do us harm."

Baird said a potentially "catastrophic" incident had been avoided.

"It was beyond disturbing, what was planned," he told reporters. "Certainly, something catastrophic was avoided yesterday and for that we
should be very thankful."

Australia in September raised its terror threat level and carried out extensive raids in Sydney and Brisbane to disrupt an alleged plot by ISIS supporters to abduct and randomly behead a member of the public.

Radicalized Australian Muslims

ISIS has captured swathes of territory across Iraq and Syria and sucked in increasing numbers of radicalized Australian Muslims to its cause.

In December, Sydney was shaken by a siege at a cafe by Iranian-born Man Haron Monis, a self-styled cleric with a history of extremist views who swore loyalty to ISIS a month before the attack.

He took 17 people hostage for some 16 hours, with the stand-off only ending after Monis shot dead cafe manager Tori Johnson, prompting police to storm the building and kill him. Another hostage was killed by a stray police bullet.

Abbott warned Wednesday to prepare for more ISIS-influenced plots.

"This is a serious problem and I fear it will get worse before it gets better, as we have seen again and again in recent times the death cult (ISIS) is reaching out all around the world, including here in Australia," he said.

Burn said the men arrested were not previously on authorities' radar and she did not know the exact nature of their alleged target, nor whether it was the police, military or the general public.

Islamic State, known for beheading and stoning to death its victims, routinely uses videos uploaded onto social media for propaganda purposes. It is increasingly luring jihadists from foreign countries, with more than 90 Australians now fighting in the Middle East.

Many others are being radicalized at home with Canberra late last year passing a law criminalizing travel to terror hotspots.

"The concerning thing about this clearly is that this represents the nature of the environment that we currently face," said Burn. "This is indicative of the threat that we now have to live with and which we are now having to deal with."

Muslims make up only 2.2% of Australia's largely Christian, but multicultural population of 23 million, with about 61.5% of them born