PM Tony Abbott warns Australians of likely terror attack

Prime Minister Tony Abbott has urged Australians preparing for holidays to be alert, warning that a terrorist attack is likely.

Security agencies have picked up a heightened level of "terrorist chatter" following the Sydney siege tragedy, in which two hostages and the armed gunman died.

The terror threat level hasn't been lifted but the likelihood of an attack remains high, the prime minister says.

Mr Abbott urged the public to go about their lives as normal but report any suspicious activity to the national security hotline.

Police and security agencies will be active and visible through the Christmas holiday period.