Acknowledging that five men had been arrested on Saturday morning and a Daesh-inspired attack was planned for Anzac Day in Melbourne, Mr Abbott said Australians should respond with defiance.

"People should turn up at Anzac Day events in the largest possible numbers," he said in Sydney.

Mr Abbott added that people should come out on April 25 "to show support for our country, our values and our armed forces".

He said that authorities did not believe there was any similar attack planned for Sydney but there would be a strong security presence at major public events over the Anzac period, including on the Gallipoli Peninsula.

"You can be confident that we are doing everything that we humanly can to keep people as safe as anyone can be," Mr Abbott said.

"The best thing we can do to counter terrorism and the threat of terrorism as individuals is to lead normal lives."

Mr Abbott noted that terrorists did not need "much more than a knife, a flag and a camera phone", however added they also needed "the will to commit a terrorist act".

On the rise of Daesh, Mr Abbott told reporters that "we've had this serious threat for quite a few months now".

He said that authorities had "responded effectively" to the increased terror threat "at all stages".

AFP deputy commissioner Michael Phelan said that the terror threat was "real".

But he said police were "extremely confident" that they had stopped the terror cell that was planning the Melbourne plot.

The federal government updated the national terrorism public alert system from medium to high - meaning an attack in Australia is considered "likely" - last September.

Mr Abbott spent Saturday morning being briefing on the raids and spoke with NSW Premier Mike Baird and his Victorian counterpart Daniel Andrews.