Australia foils beheading plot: Media

Sydney: Australian police will allege that members of a group targeted in a sweeping counter-terrorism operation on Thursday planned to behead a random member of the public after draping the victim in the flag of Islamic State militants, Australia media reported.

Without referring to specifics, Prime Minister Tony Abbott said Australia was at "serious risk from a terrorist attack".

He told reporters that the large-scale counter-terrorism raids in Sydney and Brisbane followed intelligence that Islamic militants were urging supporters to conduct "demonstration killings" in Australia.

Court documents to be revealed later on Thursday were expected to show the plan involved snatching someone in Sydney and executing them on camera, the Australian Broadcasting Corporation and other Australian media said.

"The exhortations, quite direct exhortations were coming from an Australian who is apparently quite senior in ISIS to networks of support back in Australia to conduct demonstration killings here in this country," Abbott told a media conference in the Northern Territory.

"So this is not just suspicion, this is intent and that's why the police and security agencies decided to act in the way they have."

More than 800 police were involved in the pre-dawn raids, described as the largest in Australian history. At least 15 people had been detained, with one man charged with a serious "terrorism-related" offence, police told a news conference.

The raids came just days after Australia raised its national terror threat level to "high" for the first time, citing the likelihood of terrorist attacks by Australians radicalised in Iraq or Syria.

Islamic State militants fighting in Iraq and Syria released a video on Saturday that purported to show the beheading of British aid worker David Haines.

In footage consistent with the filmed executions of two American journalists, James Foley and Steven Sotloff, in the past month, they also threatened to kill another British hostage.

In 2013, British soldier Lee Rigby was hacked to death by two Muslim converts in London who claimed the attack was in retaliation for the killing of Muslims by British forces.

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Police said the raids were focused in western Sydney and the Queensland city of Brisbane. Around half of Australia's population of roughly 500,000 Muslims lives in Sydney, with the majority in the western suburbs where the raids occurred.

New South Wales Police Commissioner Andrew Scipione said he had ordered an increased police presence onto the streets in the wake of the raids to prevent "troublemakers" taking advantage of heightened tensions.

Australia, which is due to host the Group of 20 Leaders Summit in Brisbane in mid-November, is concerned over the number of its citizens believed to be fighting overseas with Islamist militant groups.

Treasurer Joe Hockey insisted that the necessary precautions had been put in place for the G20 Leaders Summit, and dismissed concerns the raids could disrupt a meeting of the group's finance ministers set for this weekend in the city of Cairns.

"Well, of course everyone needs to make sure that with an increased threat level associated with potential terrorist attacks in Australia, we have all the necessary precautions taken for both the G20 here in Cairns and also in Brisbane, but I am very confident that all bases are covered," he said.

Up to 160 Australians have either been involved in the fighting in the Middle East or actively supporting it, officials said. At least 20 are believed to have returned to Australia and pose a national security risk, the head of the country's spy agency said when raising the threat level last week.

Abbott, highlighting the risk of homegrown militants returning from the Middle East, pledged on Sunday to send a 600-strong force as well as strike aircraft to join a U.S.-led coalition fighting Islamic State militants in Iraq.

Australia had been at the "medium" alert level since a four-tier system was introduced in 2003. A "high" alert level is used when officials believe an attack is likely, while a "severe" level means they believe an attack is imminent or has occurred.