Sydney terror fund suspect drops bail bid

A Sydney man accused of funding the terrorist organisation Islamic State has abandoned his bid for release.

Milad Atai, 20, was expected to launch a release application at Sydney's Central Local Court on Wednesday.

"In relation to the bail application, I am instructed to withdraw that," his solicitor Hisham Karnib told the court.

Atai is set to remain in custody before facing court again on May 18.

The Guildford man is facing a single charge of knowingly making funds available to a terrorist organisation - a federal charge that carries a maximum penalty of 25 years behind bars.

Atai did not appear in court nor via video link when his case was mentioned on Wednesday.

A 16-year-old schoolgirl, who is said to be known to Atai and was arrested on Tuesday over her alleged involvement in the terror funding plot, is also before the courts.

"We will be alleging that they were involved in obtaining money to send offshore to assist the Islamic State in its activities," NSW Police Deputy Commissioner Cath Burn said of Atai and the teenager following their arrests on Tuesday.

Atai had previously been targeted as part of the long-running counter-terrorism initiative Operation Appleby.

Senior police say they are deeply concerned by the number of children and young people identified during their investigations.

"Any parent that thinks about their own 16-year-old girl and starts to put together in their mind how anyone can be involved in this type of affair is, to me, mind-boggling," NSW Police Commissioner Andrew Scipione told reporters on Tuesday.

The AFP's deputy commissioner of national security, Michael Phelan, was similarly disturbed that a 16-year-old schoolgirl, who was not previously on officials' radar, now stands accused of raising money to support overseas terrorism.

"Friends, relatives, peer groups - people that are aware of the activities or even slightly suspicious - it's important that those suspicions come to law enforcement," Mr Phelan said.

Operation Appleby has been running since September 2014 and so far 14 people have been charged as a result, Mr Phelan said.

Mr Karnib did not answer questions as he left Central Local Court on Wednesday afternoon.