'IS-inspired' Melbourne Christmas Day terror plot foiled

A plot to attack prominent sites in Melbourne with a series of bombs on Christmas Day has been foiled by Australian security services.

Two of seven people initially arrested in raids on Thursday night and Friday morning in Melbourne - a 26-year-old man and a 20-year-old woman - have been released without charge.

Five men, aged between 21 and 26, remained in custody over the plot which has been described as "an imminent terrorist event" inspired by Islamic State.

Victoria state Police Chief Commissioner Graham Ashton said four of those being held were born in Australia and the fifth was Egyptian-born with Egyptian and Australian citizenship.

He added: "Certainly (there was the) potential for quite a number of people to be injured or killed in this attack."

Australian Federal Police Commissioner Andrew Colvin said: "We do believe ... that we have removed this threat in its entirety."

The plot targeted high-profile locations in Australia's second largest city, including Federation Square, Flinders Street Station and St Paul's Cathedral "possibly on Christmas Day".

Several teenagers have been arrested in Australia in recent years and charged with terror-related offences, including five young men who police alleged were planning an attack at last year's centenary ANZAC Day commemorations.

SkyNews