Fears extremists would carry out what's being described as a "demonstration killing" has led to Australia's largest ever anti-terror raids.

Police claim intelligence indicated a random attack was being planned reportedly orchestrated by Islamic State.

More than 800 officers took part in the operation which saw at least 15 people detained and one charged with a serious "terrorism-related" offence.

The early morning raids of homes and businesses in Sydney and Brisbane came just days after Australia raised its national terror threat level to "high" for the first time, citing the likelihood of terrorist attacks by Australians radicalised in Iraq or Syria.

Tony Abbott told reporters the operation had been prompted by information that an Australian, who is senior in the Islamic State militant group, had been calling on supporters in Australia to "conduct demonstration killings".

He said: "Quite direct exhortations were coming from an Australian who is apparently quite senior in ISIL to networks of support back in Australia to conduct demonstration killings here in this country.

"This is not just suspicion, this is intent and that's why the police and security agencies decided to act in the way they have."

He did not name the Australian.

Australian Federal Police Acting Commissioner Andrew Colvin said: "In all 25 search warrants were conducted across the suburbs of Sydney that included in excess of 800 officers.

"Those 800 officers comprised a range of different police skills and capabilities, obviously investigators, forensics experts, specialist tactical officers, surveillance officers and the like and as you've seen reported and as has been said already it is the largest of its type undertaken in Australia's history."

New South Wales Police Commissioner Andrew Scipione said the operation showed the reality of the threat facing Australia.

Up to 160 Australians have either been involved in the fighting in the Middle East or actively supporting it, officials said.

At least 20 are believed to have returned to Australia and pose a national security risk, the head of the country's spy agency said when raising the threat level last week.