Police are carrying out counter-terrorism raids across Sydney and Brisbane.
More than 10 arrests have been made, police said.
NSW Police said the operation on Thursday morning also involved the Australian Federal Police.
In Sydney, officers have raided properties in Beecroft, Bellavista, Guildford, Merrylands, Northmead, Wentworthville, Marsfield, Westmead, Castle Hill, Revesby, Bass Hill and Regents Park.
Three search warrants were also carried out in Brisbane’s south – in Upper Mount Gravatt East, Logan, and Underwood.
Underwood is the same suburb in which police raided an Islamic bookstore last week.
Hundreds of police officers are believed to be involved in the operation.
Guildford resident Mark Anderson had just got up for work at 4.30am when he saw a helicopter circling the area and shining a light on Bursill Street.
He also heard police on a loudspeaker yelling at someone to come outside a home on Bursill Street.
“I heard them calling out to him to ‘Come out!’ for about 10 to 15 minutes. I don’t know if he was too agreeable. I didn’t really understand a name. It was pretty intense,” Mr Anderson said.
“It was a pretty big deal at our place. Early last night a helicopter hovered over here for a bit as well, then this morning it all kicked off.”
Mr Anderson said he attempted to drive to work just before 5am but found himself in the middle of the police cordon.
“I pulled out of my driveway and turned to go to the bowling club, and a black armoured truck was there,” he said.
“I realised I was a bit inside the cordon. A cop car was blocking Railway Terrace into Bursill Street, they had blocked off right to the roundabout. The helicopter was shining a light on a house near the bowling club.”
Despite the terror raids so close to his home, Mr Anderson said he was not concerned for his safety.
“I’m confident the cops know what they’re doing. I’d be surprised if I knew something before they did,” he said.
Bass Hill resident Chris said he was woken by a helicopter hovering over his home at 4am. He went outside to find up to 40 police officers swarming his street.
“I went out to be a stickybeak, as you do, and I was told quite promptly: ‘Go, go back inside, do not come out’,” he told Triple M.
“Looking around, they had blocked off the road. It was only six doors down. It was pretty surreal.”
Last week, Australia’s terror threat level was raised from medium to high, meaning a terror attack on home soil was now officially considered “likely”.
The nation’s outgoing spy chief ASIO Director General David Irvine said an attack could manifest itself in a “Bali-style attack, although Prime Minister Tony Abbott said on Friday that the agencies had not detected any “particular plots”.
Uthman Badar of Hizb ut-Tahrir Australia, which describes itself as a political party whose ideology is Islam, said in a statement: “The AFP and NSW Police this morning conducted heavy-handed dawn raids involving hundreds of police in Sydney’s north-west suburbs as well as in Brisbane.
“As late as last week both the Prime Minister and outgoing ASIO boss David Irvine confirmed that there was no intelligence of any plans to carry out attacks in Australia. A few days later and we wake up to heavy-handed raids and talk of a ‘terrorist network’ planning attacks.
“The timing of these raids is suspect indeed. With the ‘anti-terror’ laws, which hit a wall in the community, to be tabled to Parliament next week and with ‘military intervention’ imminent in Iraq, these raids are very timely for the government and its propaganda campaign for the same.”
Further updates were expected later on Thursday morning.
– with Kristian Silva