Police disrupted a "terrorist plot" to bring down a plane and arrested four men on Saturday in raids on homes in several Sydney suburbs, the prime minister said on Sunday.

Prime Minister Malcolm Turnbull said security had been increased at Sydney Airport since Thursday because of the plot. The increased security measures had been extended to all major international and domestic terminals around Australia overnight.

"I can report last night that there has been a major joint counterterrorism operation to disrupt a terrorist plot to bring down an airplane," Turnbull told reporters. "The operation is continuing."

Australian Federal Police Commissioner Andrew Colvin said details were scant on the specifics of the attack, the location and timing.

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"In recent days, law enforcement has become aware of information that suggested some people in Sydney were planning to commit a terrorist attack using an improvised device," Colvin said.

"We are investigating information indicating the aviation industry was potentially a target of that attack," he added.

Colvin declined to say whether the suspects were known to police before the raids, or whether they were part of the Islamic State of Iraq and the Levant (ISIL, also known as ISIS) or any other group.

Officials did not specify if the alleged plot targeted a domestic or international flight, but Sydney's Daily Telegraph reported that a local route had been the objective.

Turnbull advised travellers in Australia to arrive at Australian airports earlier than usual - two hours before departure - to allow for extra security screening and to minimise carry-on baggage.

Justice Minister Michael Keenan said the plot was the 13th significant threat disrupted by police since Australia's threat level was elevated in 2014.

Several attacks have been carried out, including a cafe siege in 2014 where two hostages were killed and the murder of a Sydney police employee in 2015 by a 15-year-old boy.

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"The primary threat to Australia still remains lone actors, but the events overnight remind us that there is still the ability for people to have sophisticated plots and sophisticated attacks still remain a real threat," Keenan said, "In light of this information, it's very important that everyone in Australia remains vigilant."

The operation was carried out by the Australian Federal Police, the New South Wales state police and the Australian Security Intelligence Organisation, the country's main domestic spy agency. The investigation could continue for days, Colvin said.

Seven Network television channel reported that 40 riot squad officers wearing gas masks stormed a central Sydney house before an explosives team found a suspicious device.

A woman led from a raid by police with her head covered told Nine Network Television: "I love Australia."

None of the four suspects arrested in five raids had been charged, police said.

Source: News agencies