A 20-year-old man has been arrested over an alleged terror plot to "shoot and kill as many people as possible" in a terror attack on Federation Square during Melbourne's New Year's Eve celebrations.
The man was arrested during counter-terror raids on Monday afternoon, accused of attempting to obtain an automatic rifle to carry out the attack.
An Australian-born citizen with Somalian parents, he was taken into custody when authorities swooped on his Werribee home where he lives with his parents and siblings in coordinated raids, police confirmed in a statement released on Tuesday.
Deputy Commissioner Shane Patton told a press conference on Tuesday morning that police had been monitoring the man for "a very lengthy period of time" but he had not succeeded in getting access to a gun at the time he was arrested.
But police did uncover Al-Qaeda-produced guide books on how to commit terrorist acts and how to use handguns and rifles during Monday's raids.
"What we will be alleging is that he was intending to use a firearm to shoot and kill as many people as he could in federation square area on New Year's Eve," Deputy Commissioner Patton told a press conference on Tuesday morning.
Federation Square will play host to a free music festival and fireworks viewing on New Year's Eve and police said anyone looking to attend such events should feel safe to go ahead as planned.
Around 450,000 revellers are expected to gather in Melbourne's CBD to bring in the new year on December 31.
"We are quite confident that there is no risk or no threat to the Victorian community now that we have removed him from society and he's being interviewed," Deputy Commissioner Patton said.
The man was "associated" with other extremists in Victoria, but "it is a very small community of extremists", he added.
"The potential of the attack is catastrophic. This is a person who has expressed an intention to try and kill as many people as he could. It's horrendous."
"This is a person who would become particularly energised when overseas events occurred. He expressed a great amount of interest in committing an attack himself."
Victoria Police, the Australian Federal Police and ASIO also targeted another home in Meadow Heights, as well as a computer business where the man worked in Footscray, seizing computers and other electronics.
The man is currently being interrogated by police in relation to the crimes of Acts in Preparation to Commit a Terrorist Attack and Collecting Documents to Facilitate a Terrorist Act, with an arrest expected either on Tuesday or in the early hours of Wednesday.
NYE 'TERROR PLOT' | Man arrested as police execute warrants across western suburbs.
— 3AW Melbourne (@3AW693) November 27, 2017
"We are not looking for any other suspects," Deputy Commissioner Patton said.
The man has not been linked to any previous raids or terror arrests and has no prior criminal record.