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imageSYDNEY: Police on Thursday made a series of arrests in pre-dawn counter-terrorism raids across Sydney and Brisbane, with those detained reportedly suspected of links to the militants group Islamic State.

The large-scale operation, which spanned multiple suburbs, comes barely a week after Australia raised the terror threat level to "high" for the first time in a decade on growing concern about militants returning from fighting in Iraq and Syria.

Police said 600 officers were involved and while they did not immediately detail how many arrests were made, the Australian Broadcasting Corporation said at least a dozen people were taken in for questioning.

"Today's operation reflects the challenges that we face," New South Wales Police Commissioner Andrew Scipione said.

"This has been a big operation and it reflects what we are dealing with right now."

The government believes up to 60 Australians are fighting alongside militants for Islamic State, while another 100 were actively working to support the movement at home.

Immigration Minister Scott Morrison, who sits on Australia's national security committee, said the raids demonstrated "the very real threat" facing Australia.

"I think the scale of what we're seeing in this ongoing operation this morning, over 600 police officers involved, I think demonstrates the very real threat that's there and the incredibly good work which is being done by our agencies," he said.

"And I think it again supports why the government has been so strong in its response to this threat."

The latest raids came after months of surveillance of people believed linked to the Islamic State group of extremists, local reports said.

They followed the arrests of two people last week in Brisbane who were charged with allegedly recruiting, funding and sending jihadist fighters to Syria.

And, on Wednesday, a Sydney-based money transfer business was shut down amid concerns it was being used to funnel funds to the Middle East to finance terrorism.

Last week's decision to raise the terror threat level after years on "medium" officially means a "terrorist attack is likely", and comes after repeated government warnings that attacks could happen.

The lifting of the threat level was "not based on knowledge of a specific attack plan but rather a body of evidence that points to the increased likelihood of a terrorist attack in Australia", Prime Minister Tony Abbott said at the time.

"Security and intelligence agencies are concerned about the increasing number of Australians working with, connected to, or inspired by terrorist groups such as ISIL (Islamic State), Jabhat Al-Nusrah, and Al-Qaeda," he said.

"The threat they pose has been increasing for more than a year."

The "high" alert is just below "extreme" -- the top level -- which would indicate a "terrorist attack is imminent or has occurred".

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