"This operation has disrupted an alleged terrorist attack that could have claimed many lives," he said.

Negus added that the men intended to "kill as many soldiers as they could before they themselves were killed".

Al-Shabab link

According to police the men were linked to al-Shabab, a Somali group accused by the US of being a "terrorist" organisation that provides haven to al-Qaeda "elements" wanted for the 1998 bombings of the US embassies in Kenya and Tanzania.

More than 400 police officers conducted raids at 19 locations across Melbourne [EPA]
Police say suspected members of the Melbourne-based group had travelled to Somalia "to participate in hostilities there" and actively seek a fatwa or religious ruling from there "to justify the group's plan to conduct a terrorist act in Australia".

Negus said the group had been under investigation since January.

Kevin Rudd, the Australian prime minister, said the alleged plot was a "sober reminder" that terrorism remained a threat to Australia.

However, he said he had been advised that "events today do not at this time warrant any change to our national counterterrorism level, which remains at medium" - the same level that has been in place in Australia since the September 11, 2001 attacks in the US.

More than 400 police officers were involved in the early morning raids on 19 properties across Melbourne on Tuesday.

Separate trial

The raids come a week after an Australian man from Melbourne admitted in court to being part of a cell that plotted to kill thousands of people by bombing major sports events.

Shane Kent, 33, who is scheduled to be sentenced on August 17, pleaded guilty to being a member of a cell led by Muslim cleric Abdul Nacer Benbrika.

He admitted involvement in its plans to bomb sports events including the Australian Football League's 2005 grand final, which attracted some 92,000 fans and a TV audience of millions.

Six members of the cell, as well as Benbrika, were last year found guilty on related charges in Australia's largest-ever terrorism trial.

Benbrika was jailed for 15 years and the six followers received at least seven-and-a-half years each. Another man, Izzydeen Atik, pleaded guilty in August 2007 and was jailed for five-and-a-half years.

Judge Bernard Bongiorno, said when sentencing Benbrika in February, that he had shown no remorse and talked about continuing the group's activities behind bars if jailed.

Australia toughened its laws to detain those suspected to be in the early stages of planning terror acts following the London transport bombings in July 2005.