A series of raids were carried out across Sydney today, which the prime minister said were "to disrupt and prevent plans to undertake terrorist attacks in Australia".
Reports said armed police moved in on homes in at least three neighbourhoods, including in the inner city.
"This activity relates to an ongoing investigation," a police spokesman said, without giving further details.
National broadcaster ABC said at least one man was in custody while the Seven Network reported 40 riot squad officers stormed a home before an explosives team found a suspicious device.
TV footage showed a man with a bandage on his head and draped in a blanket being led away by authorities.
"These operations are designed to disrupt and prevent plans to undertake terrorist attacks in Australia," Prime Minister Malcolm Turnbull said in a statement.
"I have been kept closely briefed on the progress of the operations by the heads of our relevant security agencies.
"However, as the operations are ongoing, it is inappropriate to provide further detail at this stage."
Australian officials have grown increasingly concerned about the threat of extremist attacks and have prevented 12 on home soil since September 2014.
But five have taken place, mostly with guns, including a fatal shootout in Melbourne in June claimed by the Islamic State group.
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