Melbourne: Five in custody over suspected Christmas Day terror plot

Australian Police has arrested a group of Islamic radicals suspected of planning a terrorist attack at numerous landmarks in Melbourne on Christmas Day.

The plotters are believed to have included six men and one woman, all in their 20s, who allegedly planned to plant bombs and use knives and firearms to launch a "multi-node" attack at Federation Square, Flinders Street Station and St Paul's Cathedral, reports the Telegraph.

The police has taken five people into custody, including four Australian-born men - some of whom had a Lebanese background - and an Egyptian-born Australian man.

Several of the alleged attackers have been seen conducting reconnaissance at Federation Square, a popular meeting place and tourist landmark in the city centre.

Australian Prime Minister Malcolm Turnbull said the plot was one of the most "substantial" attempted terrorist attacks in recent history.

"What they [security authorities] have uncovered is a plot to explode improvised explosive devices in central Melbourne in the area of Federation Square, on or about Christmas Day," he said.

The incident comes just a few days after truck drove into a Christmas market in Berlin, killing 12 people in an attack claimed by the Islamic State.

High Alert has been issued in the country following the incident.

Police said the suspects were "self-radicalised" but inspired by Islamic State. The seven people were taken into custody and five locations were searched across Melbourne following a two-week operation involving state and federal police and ASIO, the domestic spy agency.

A 26-year-old man and 20-year-old woman have since been released.

"We believe [the plot] was going to involve an explosive event," said Commissioner Graham Ashton, chief of police in the state of Victoria.

The arrested men are due to face court later on Friday.