Australian police have foiled a terrorist plot to bring down a plane.

Officers arrested four men on Saturday in raids on homes in several Sydney suburbs, Australian Prime Minister Malcolm Turnbull said.

Security had been stepped up at Sydney Airport since Thursday and increased security measures had been extended to all major international and domestic terminals around Australia overnight.

Australia's national terror threat level remains at "probable".

"I can report last night that there has been a major joint counterterrorism operation to disrupt a terrorist plot to bring down an airplane," Mr Turnbull told reporters.

Seven Network television reported that 40 riot squad officers wearing gas masks stormed an inner-Sydney house before an explosives team found a suspicious device.

A woman led from a raid by police with her head covered told Nine Network Television: "I love Australia."

None of the four suspects arrested in five raids had been charged, police said.

Australian Federal Police Commissioner Andrew Colivn said details were scant on the specifics of the attack, the location and timing.

"In recent days, law enforcement has been become aware of information that suggested some people in Sydney were planning to commit a terrorist attack using an improvised devise," Mr Colvin said.

"We are investigating information indicating the aviation industry was potentially a target of that attack," he added.

Justice Minister Michael Keenan said the plot was the 13th significant threat disrupted by police since Australia's terrorist threat level was elevated in 2014. Five plots have been executed.