Melbourne police foil New Year's Eve terror plot

Melbourne Police say a terror suspect was planning to kill as many people as possible, by gunning down revellers on New Year's Eve.

The 20-year-old, who lives with his parents, was arrested on Monday, after trying to buy an automatic weapon.

Police say he had possession of an Al-Qaeda handbook and planned to open fire near Federation Square, where 450,000 people gather on New Year's Eve in Melbourne.

ABC news reports he appeared in the Melbourne Magistrates Court on Tuesday afternoon, charged with gathering the documents to facilitate a terror attack and preparing to commit a terrorist attack.