Police have carried out anti-terror raids in Sydney sparked by intelligence reports that Islamic extremists were planning random killings in Australia.
PM Tony Abbott said a senior Australian Islamic State militant had called for “demonstration killings”, reportedly including a public beheading.
The raids, with at least 800 heavily-armed officers, led to 15 arrests.
One man has been charged with planning an attack. Prosecutors said he planned to “gruesomely” execute someone.
Australian media reports said a plot involved beheading a random member of the public after draping them in an Islamic State flag.
Asked about the reports in a press conference, Mr Abbott said: “That’s the intelligence we received.”
“Direct exhortations were coming from an Australian who is apparently quite senior in ISIL (Islamic State) to networks of support back in Australia to conduct demonstration killings here in this country.”
Analysis: BBC’s Jon Donnison in Sydney
The news of an alleged plot to publicly behead a random Australian will shock many people here, including the vast majority of this country’s long-established moderate Muslim community.
Many Muslims are unhappy with what’s going on in Iraq and Syria but would never resort to violence. These raids risk antagonising the broader Islamic community.
But Australia, like many countries including Britain, is worried about the threat from Islamic State, not just abroad but at home. More than a decade on from Australia’s support for the US-led war in Iraq, the country finds itself embroiled in a conflict that is far from over.
Tony Abbott this week announced he is sending 600 troops to the Middle East to assist in the fight against Islamic State. Security forces clearly face a battle at home too.