Foiled Australian terror plot a 'credible threat'

An "elaborate conspiracy" is believed to have been foiled in Australia, which authorities believe was a terrorist plot to bring down a plane.

A number of people have been arrested in raids Saturday night and Sunday morning in Sydney, federal police commissioner Andrew Colvin said.

"We have taken this threat very seriously... We think that this was credible and that there was an intention, and there was quite possible a capability as well," he said in a press conference on Sunday.

He said the plot appeared to involve a "terrorist act using an improvised device", targeting an airplane.

Australian Prime Minister Malcolm Turnbull says the national threat level is currently at "probable" but assured Australians their "number one priority is to keep you safe".

Several items "of great interest to police" have been found in the searches so far, Cmmr Colvin said, with investigations expected to continue into the coming days.

It's believed the planned attack was "Islamic-inspired terrorism", but the background has yet to be fully investigated.

The raids on Saturday night took place across Surry Hills, Lakemba, Wiley Park and Punchbowl, with police reportedly finding a suspicious device in a home at Surry Hills.

Mr Turnbull described the plot as a "quite elaborate conspiracy", rather than a 'lone wolf' operation.