Australian police arrested five Australian teenagers in Melbourne on Saturday over an alleged terrorist plot targeting police officers, officials said.

The suspects included two 18-year-olds who are alleged to have been preparing an attack at the ANZAC Day ceremony in Melbourne later this month, Australian Federal Police Acting Deputy Commissioner Neil Gaughan told reporters.

Another 18-year-old was arrested on weapons charges, and two other men, aged 18 and 19, were in custody and assisting police. All the arrests took place in Melbourne.

ANZAC Day is the annual April 25 commemoration of the 1915 Gallipoli landings the first major military action fought by the Australian and New Zealand Army Corps during World War I.

Police said they believe the plot was inspired by the self-proclaimed Islamic State of Iraq and al-Sham (ISIS) and was to have involved "edged weapons."

"At this stage, we have no information that it was a planned beheading. But there was reference to an attack on police," Gaughan said. "Some evidence that we have collected at a couple of the scenes, and some other information we have, leads us to believe that this particular matter was ISIS-inspired."

Australia's government has raised the country's terror warning level in response to the domestic threat posed by supporters of ISIS. In September last year, the group's spokesman Abu Mohammed al-Adnani issued a message urging attacks abroad, specifically mentioning Australia.

Federal Police Deputy Commissioner Michael Phelan said at a separate news conference that the teens had links to Numan Haider, an 18-year-old who stabbed two Melbourne police officers and was subsequently shot dead in September. Haider had caught authorities' attention months earlier over what police considered troubling behavior, including waving what appeared to be an ISIS flag at a shopping mall.

Phelan said the teens arrested Saturday were on officials' radar for months, but the investigation was ramped up when it appeared they were planning a specific attack.

One of the teens, Sevdet Besim, appeared briefly in court Saturday on a charge of preparing for, or planning, a terrorist act. He did not apply for bail and was ordered to reappear in court next week.

Prime Minister Tony Abbott has warned that the terrorism threat in Australia has escalated, with one-third of all terrorism-related arrests since 2001 occurring in the last six months. At least 110 Australians have gone to Iraq and Syria to fight alongside extremists, and the nation's security agency is juggling more than 400 high-priority counterterrorism investigations more than double the number a year ago.

Abbott said the latest alleged plot was at an advanced stage of planning, prompting police to swoop in. Still, he urged the public to participate in ANZAC Day events as usual.

"The best sign of defiance we can give to those who would do us harm is to go about a normal, peaceful, free and fair Australian life," he said. "And I say to everyone who is thinking of going to an ANZAC Day event, please don't be deterred. Turn up in the largest possible numbers to support our country."