Two men arrested in counter-terrorism raids in Sydney had armed themselves with a machete and a hunting knife and made a video detailing their plot, police say.
Authorities arrested the pair on Tuesday, the same day they were allegedly planning to maim or kill someone in a knife attack.
A home-made flag, representing the prescribed terrorist organisation Islamic State, was found at the men's Fairfield home, in Sydney's west, along with a machete, a hunting knife, and a video featuring one of the men making threats.
Deputy NSW Police Commissioner Catherine Burn said she did not know if the man planned to behead someone, and would not detail what was said in the video.
But she said the plot was "consistent with the IS messaging".
"We believe that the men were potentially going to harm somebody, maybe even kill somebody, and potentially using one of the items that we ... recovered yesterday - potentially a knife," she told reporters in Sydney.
The raids, codenamed Operation CASTRUM, were carried out as by NSW Police's Joint Counter Terrorism Team, police said on Wednesday.
The men, who are due to appear in Fairfield Local Court on Wednesday, have been charged with Acts done in preparation for, or planning terrorists acts.
Police allege the two men were going to undertake an act of terrorism in Australia as revenge for incidents overseas.
Searches were also conducted at the residence, as well as a motor vehicle, and where the men work.
Alleged plot 'beyond disturbing': Baird
NSW has avoided a potential "catastrophic" terrorist attack, Premier Mike Baird said.
The Premier reminded the community to remain vigilant after two men were arrested and charged over acts of terrorism.
"It was beyond disturbing, what was planned," Mr Baird said on Wednesday.
"Certainly, something catastrophic was avoided yesterday and for that we should be very thankful."Mr Baird reminded the community not to be complacent and urged them to report any suspicious activity to authorities.
