Australian police have arrested five teenagers in the country's second-largest city over an alleged terrorist plot to target police officers on Anzac Day, according to authorities.

The five teenagers were arrested early on Saturday in an operation in suburban Melbourne carried out by Victorian state police and the Australian Federal Police. Searches were still continuing in the south-east of the city, said the statement, issued jointly by the two forces.

Two 18-year-olds were arrested regarding alleged terrorism-related offences. A third 18-year-old has been arrested in relation to alleged weapons offences, while two other teenagers aged 18 and 19 are in custody and assisting police with their enquiries. All five are from suburbs in the city's far southeast.

"It is alleged the men were undertaking preparations for planning a terrorist act in Australia, which included targeting police officers," the statement said.

The five had allegedly planned to carry out an attack against police during the upcoming Anzac Day centenary commemoration on April 25, Neil Gaughan, the acting deputy commissioner of the Federal Police, told local media.

Anzac Day falls on the anniversary of the first major military action fought by Australian and New Zealand forces during the first World War; the invasion of Gallipoli in Turkey.

Australia has recently sent hundreds of soldiers to Iraq to help train forces fighting the Islamic State of Iraq and the Levant (ISIL).

The country raised its threat level to high last September and has since carried out a series of counter-terrorism raids, with alarm fuelled by the departure of at least 110 of its nationals to Iraq and Syria to fight with ISIL.

Australians have been recruited to both sides of the conflict, and some have been killed, despite a government ban on Australians fighting on either side.

A string of incidents, including a December siege in a Sydney cafe by a self-styled cleric who attempted to link his actions to ISIL, have raised fears over radicalisation among Muslims in Australia.

In February, two men were charged after police thwarted an "imminent" attack in Sydney, seizing an ISIL flag, a machete and an Arabic-language video detailing the alleged plot.

Source: Agencies