Australian police say they have prevented an "imminent" terror attack linked to Islamic State (IS) after arresting two men in a Sydney suburb.
Police say a machete, a hunting knife and homemade IS flag were seized in Fairfield, as well as a video of a man talking about an attack.
New South Wales Deputy Police Commissioner Catherine Burn said the planned attack was "consistent with the messaging coming out of IS".
State premier Mike Baird said a potentially "catastrophic" incident had been avoided.
He said: "It was beyond disturbing, what was planned. Certainly, something catastrophic was avoided... and for that we should be very thankful."
When asked whether a beheading was planned, Ms Burns said police were unsure of the attack's nature, but added it was imminent and likely to have involved a knife.
"We believe that the men were potentially going to harm somebody, maybe even kill somebody, and potentially using one of the items that we identified and recovered yesterday, potentially a knife," she said.
The men, aged 24 and 25, would have carried out the attack on Tuesday if they had not been arrested that day, Ms Burns added.
"We built up information, we received further information which indicated an attack was imminent, and we acted."
The men will appear in court later charged with undertaking acts in preparation or planning for a terrorist act.
They have been refused bail and could face life in prison if convicted.
Ms Burn said the men were not previously on their radar and she did not know whether the alleged target was the police, military or the general public.
She did confirm that one of those arrested features in the video that was seized.
Police are trying to determine if the men were in contact with anyone associated with IS.
In December, a gunman claiming to represent IS took 18 people hostage in a 16-hour siege at a Sydney cafe.
The hostage situation ended in a hail of gunfire when police rushed the cafe.
The gunman, Man Haron Monis, and hostages Tori Johnson and Katrina Dawson died in the siege.
A number of raids have been carried out in Sydney and Melbourne since Australia raised its terror threat level to high for the first time in September, citing the likelihood of attacks by Australians radicalised in Iraq or Syria.
Australia, which backs US action against IS in Syria and Iraq, believes at least 70 citizens are fighting in the region, backed by 100 "facilitators" at home.
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