Terror suspect was living lonely life in Sydney, father says

A western Sydney terror suspect spoke to his father over the phone just hours before he was arrested over an "imminent attack" and everything seemed fine.

Omar Al-Kutobi's father, Ahmad, told Fairfax Media he called his son from Germany on Tuesday and they talked about his work as a truck driver and he asked about his mother.

"Everything was ok," he was quoted as saying.

A few hours later, heavily-armed counter-terrorism police stormed the granny flat that Al-Kutobi, 24, shared with Mohammed Kiad, 25, and allegedly thwarted an Islamic State-inspired attack on either a police station or officers in the street.

Police say the pair was planning to use either a machete or a hunting knife purchased just an hour earlier from a nearby supplies store.

Officers said they seized these objects from the flat as well as a flag "representing" the terror group ISIL and a video that showed a man allegedly talking about carrying out an attack.

Al-Kutobi's father, who worked as a translator with the US army in Iraq and spent thousands of dollars to send his son to Australia in 2009, said the 24-year-old was lonely and tired as he tried to balance working as a removalist with studying nursing.

"He told [me] many times to come to him because he is alone," Ahmad was quoted as saying.

But he loved Australia and became a citizen in 2013, the father added.

The men appeared before Fairfield Local Court yesterday and didn't apply for bail, which was formally refused.

They are due to appear at Central Local Court via audio visual link today amid a heavy security presence.

Police are expected to allege the two men planned on attacking a Sydney police station or even a police officer on the street at midnight on Tuesday.

They made the arrest under the belief an attack was imminent, and it was described as the closest we've been to an attack of this sort.

Neighbours have described the pair as quiet, saying they kept to themselves and didn’t mix with others.

"They don't mingle much," Manuel Abello said.

"I never expected this at all. They are quite nice. Very rarely they have guests."

Mr Kiad's car is still parked out the front of the Fairfield property, with finger printing dust the only tell-tale signs of the police search.

Another neighbour witnessed Tuesday's raid and said he was shocked to hear commotion coming from the pair’s bungalow about 4pm.

"I was watching a movie and then suddenly the electricity turned off ... so I went outside," Roberto Macatangay told 9NEWS.

"They (police) pointed a machine gun at me."

He said he saw both of his neighbours lying face down and cuffed and estimated "about 60" police officers were at the scene before he was ushered back inside his home.

But Mr Macatangay who has lived in the area for about three years said he believed Mr Al-Kutobi had been studying computer science and mostly kept to himself.

He said Mr Kiad split from his wife last year and moved from Auburn to live with Mr Al-Kutobi.

Deputy Commissioner Catherine Burn admitted authorities did not know anything about the men, aged 24 and 25, until hours before the arrests were carried out by the joint NSW Police Force and Australia Federal Police Operation CASTRUM.

"These men were not on our radar," she told reporters yesterday.

"The type of act that we will allege was going to take place is consistent with IS messages," she said, referring to another acronym used to describe the militants.

Ms Burn said police acted quickly to stem what they believed would have been a violent attack on Australian soil.

"We received information that an attack was imminent and we acted," she said.

Asked if the men were planning a beheading, she said: "We don't really know what act they were going to commit".

"It was likely to involve one of the items which we seized which was a knife and it was going to involve a person."

ISIL has in the past urged homegrown extremists to carry out attacks on Western police and other authority figures.

The group has also become notorious for its filmed beheadings of hostages.

Ms Burn said the men posed no further threat to the community, but emphasised the need for the public to come forward with any information.

"The concerning thing is that it represents the nature of the environment we currently face," she said.

"We are ready, willing and more than able to respond to disrupt the plans of those who think they can engage in what can only be described as hideous offences so strongly opposed by the community."

Ms Burn said police were trying to determine if the men were in contact with anyone from ISIL.

"We are conducting further investigations. (On Tuesday), our focus was to act on information that we received about something that was imminent," she said.

"We believe that we have stopped that threat from occurring. However, there are further investigations that now we will need to follow through."

NSW Premier Mike Baird said he was proud of the work carried out by NSW and Federal police, but urged residents to not become complacent.

“I have ever confidence in our forces – they acted decisively and effectively and it was a first class job,” he told reporters in Sydney yesterday.

“But (the arrests) are very concerning and shows this is an ongoing battle, an ongoing fight… we cannot afford to become complacent.”

He urged anyone who witnessed anything suspicious to report it to police.

Anybody with any information is advised to contact Crime Stoppers on 1800 333 000 or the National Security Hotline on 1800 123 400.